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A REPORT
TO THE
ARIZONA LEGISLATURE
Debra K. Davenport
Auditor General
Arizona Health Care
Cost Containment
System
Quality of Care
Performance Audit Division
SEPTEMBER • 2002
REPORT NO. 02 – 08
Performance Audit
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five
senators and five representatives. Her mission is to provide independent and impartial information and specific
recommendations to improve the operations of state and local government entities. To this end, she provides financial
audits and accounting services to the State and political subdivisions, investigates possible misuse of public monies, and
conducts performance audits of school districts, state agencies, and the programs they administer.
The Joint Legislative Audit Committee
Representative Roberta L. Voss, Chair Senator Ken Bennett, Vice Chair
Representative Robert Blendu Senator Herb Guenther
Representative Gabrielle Giffords Senator Dean Martin
Representative Barbara Leff Senator Peter Rios
Representative James Sedillo Senator Tom Smith
Representative James Weiers (ex-officio) Senator Randall Gnant (ex-officio)
Audit Staff
Dale Chapman, Manager and Contact Person
Michele Diamond, Team leader Andrea Leder
Mary Edmonds
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
September 16, 2002
Members of the Arizona Legislature
The Honorable Jane Dee Hull, Governor
Ms. Phyllis Biedess, Director
Arizona Health Care Cost Containment System
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Arizona Health
Care Cost Containment System’s processes for monitoring the quality of care provided to its
members. This audit, part of a Sunset review of the agency, was conducted pursuant to an August 9,
2001, resolution of the Joint Legislative Audit Committee and under the authority vested in the
Auditor General by Arizona Revised Statutes (A.R.S.) §41-1279 and 41-2951 et seq. I am also
transmitting with this report a copy of the Report Highlights for this audit to provide a quick
summary for your convenience.
This is the fourth in a series of five reports to be issued on the Arizona Health Care Cost Containment
System.
As outlined in its response, AHCCCS agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on September 17, 2002.
Sincerely,
Debbie Davenport
Auditor General
Enclosure
Services:
The Office of Medical Management (OMM) performs
the following primary services to monitor quality of care:
1. Participates in the annual Operational and Financial
Reviews of AHCCCS health plans;
2. Monitors the investigation and resolution of quality-of-care
complaints that AHCCCS receives;
3. Develops and tracks performance indicators;
4. Tracks utilization of services;
5. Pre-authorizes high-cost services, such as transplants and
treatment for severe head injuries;
6. Oversees contracted pharmaceutical services; and
7. Establishes AHCCCS clinical policies.
Facilities and Equipment:
OMM performs its duties at the state-owned building
located at 701 East Jefferson Street, in Phoenix.
OMM owns standard equipment, such as computers,
printers, copy machines, and fax machines. It also has
one vehicle assigned to it.
Mission:
To establish and implement all clinical policies and
services to ensure comprehensive quality healthcare is
delivered to eligible Arizonans in a cost-effective
manner.
Arizona Health Care Cost Containment System
Office of Medical Management
Office of the Auditor General
FACT SHEET
OMM funding sources:
$3.9 million (fiscal year 2002)
OMM staffing:
60 FTE (fiscal year 2002)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$2.3 milion from federal sou1rces
$1.3 million from the State General Fund
$143,100 from state and federal sources to help
administer the Children's Health Insurance Program
$153,000 from Arizona Tobacco Litigation Fund monies
Clinical Services
Management
(24 FTE)
Clinical Quality
Management
(14 FTE)
Medical
Policy
(7 FTE)
Administration
(7 FTE)
Clinical
Research and
Data
(8 FTE)
State of Arizona
Office goals:
AHCCCS has established the following seven goals for the Office. AHCCCS established
the first two goals to report healthcare information annually to the Legislature, while the
remaining goals are internal to the Office.
1. To improve the health status for children.
2. To improve the health status of AHCCCS-enrolled women and senior citizens.
3. To continue refinement of OMM internal processes.
4. To improve internal visibility and coordination within AHCCCS.
5. To improve our partnership with contracted health plans by becoming a resource of
expertise and innovation in the clinical aspects of managed healthcare.
6. To increase the frequency and improve the effectiveness of OMM interaction with the
medical community.
7. To strengthen our quality management initiatives.
Adequacy of performance measures:
OMM has established 17 clinical performance indicators or performance measures that
track the quality of care provided to its members. As indicated in Finding 4 (see pages 29
through 34), AHCCCS collects and tracks data for these indicators, which include
measures that track the percentage of children with access to a primary care provider, the
percentage of 2-year-old children who have received immunizations, the percentage of
well-child visits, women receiving cervical and breast cancer screening, and the percentage
of nursing home residents who receive flu and pneumococcal immunizations.
However, AHCCCS has not established performance measures for OMM’s internal goals
and should consider doing so. Specifically, AHCCCS should consider establishing output,
efficiency, quality, and outcome measures. In fact, OMM collects, tracks, and analyzes the
data needed to support and report many of these suggested performance measures. For
example:
􀁺􇩁 AHCCCS could adopt output measures that would report the number of medical policies revised
or implemented, or the number of health plan requests for assistance fulfilled.
􀁺􇩁 AHCCCS could adopt quality measures that would emphasize OMM’s reliability or
responsiveness to the customer or stakeholder, such as health plan satisfaction with medical
policies and OMM assistance in interpreting medical policies.
􀁺􇩁 AHCCCS could also adopt efficiency measures that would reflect the cost or timeliness of services
provided by OMM. These measures might track how timely OMM responds to health plan or
internal requests for assistance, or whether complaints OMM receives are resolved in a timely
manner.
The Office of the Auditor General has conducted a performance audit of the Arizona
Health Care Cost Containment System’s (AHCCCS) processes for monitoring the
quality of care provided to participants in the State’s major healthcare program.
AHCCCS administers Arizona’s Medicaid program and is also the healthcare
program for low-income Arizonans who do not qualify for Medicaid. This audit, part of
a Sunset review of the agency, was conducted pursuant to an August 9, 2001,
resolution of the Joint Legislative Audit Committee and under the authority vested in
the Auditor General by Arizona Revised Statutes (A.R.S.) §§41-1279 and 41-2951 et
seq. It is the fourth in a series of five audits of AHCCCS. Other audits in the series
cover the Division of Member Services, AHCCCS’ rate-setting processes, AHCCCS’
medical services contracting practices, and an evaluation of the agency using the
criteria in Arizona’s sunset law.
Monitoring the quality of care and services provided within a managed care system
is important to ensure that members receive needed services. A U.S. General
Accounting Office report found that managed care can create an incentive to under-serve
or even deny beneficiaries access to needed care, since plans can profit from
not delivering services.1 Another study has found that monitoring quality of care may
be especially important for programs serving the Medicaid population because they
contain many disadvantaged and vulnerable individuals.2 Because of this
importance, monitoring the quality of care is one of AHCCCS’ primary functions.
AHCCCS uses four main tools for monitoring quality of care:
􀁺􇩏 Operational and Financial Reviews—These annual onsite reviews assess health
plans’ compliance with AHCCCS standards and contract requirements in
several categories, including quality of care. These reviews are one of AHCCCS’
primary ways to ensure that plans provide high-quality, accessible health
services.
􀁺􇩑 Quality-of-Care Complaints—These complaints typically involve concerns with
the medical care members have received and can be used to identify systemic
problems and make improvements.
page i
1 U.S. General Accounting Office, Medicaid Managed Care: Challenge of Holding Plans Accountable Requires Greater State
Effort, May 1997. (GAO/HEHS-97-86).
2 Hadley, James P. and Wolf, Linda F. “Monitoring and Evaluating the Delivery of Services Under Managed Care.” Health
Care Financing Review, Washington, Summer 1996.
Office of the Auditor General
SUMMARY
page ii
State of Arizona
􀁺􇩃 Clinical performance indicators—AHCCCS has established 17 clinical
performance indicators to determine how well the overall healthcare system is
delivering services, such as cancer screening or immunizations, for specific
populations within its membership.
􀁺􇩑 Quality management plans—AHCCCS annually reviews each health plan’s
quality management plan to assess the systems they have established to
monitor and improve quality of care. The quality management plan includes an
evaluation of the plan’s quality management programs and documents health
plan policies and procedures for conducting quality management activities.
In addition to establishing these and other mechanisms to monitor the quality of care,
AHCCCS has been recognized for its performance. According to a Nelson A.
Rockefeller Institute of Government study, which assessed Medicaid managed care
in five states, Arizona “has perhaps the longest running, best-established managed
care program in the country…(AHCCCS) has been extensively evaluated and has
received uniformly high marks both for management and program outcomes.”1
Additionally, a U.S. General Accounting Office report notes that AHCCCS requires its
health plans to provide data documenting the patient care provided and to conduct
various patient outcome studies and also indicates that “Arizona’s AHCCCS program
can serve as a model for other Medicaid programs.”2
AHCCCS should strengthen its health plan reviews (see
pages 9 through 15)
AHCCCS can strengthen its annual operational and financial reviews (OFR) by
focusing more heavily on plans’ actual performance in providing quality care. Auditors
found that reviews were primarily evaluating whether plans had policies or processes
in place, rather than whether the policies or processes produced acceptable results.
For example, AHCCCS requires its health plans to provide medically necessary
transportation in a timely manner. AHCCCS members are provided with both
emergency and non-emergency transportation if needed. AHCCCS reviews whether
a health plan has a system in place to monitor wait times. However, it does not review
what the actual transportation wait times were, or whether the transportation was
provided on a timely basis. To conduct the additional work needed to assess
performance outcomes, AHCCCS may need to reduce or prioritize the various
standards it evaluates, as it currently evaluates up to 111 standards during some
reviews.
1 James W. Fossett and Associates, Malcolm Goggin, John S. Hall, Jocelyn Johnston, Christopher Plein, Richard Roper,
and Carol Weissert, Managing Accountability in Medicaid Managed Care: The Politics of Public Management, The Nelson
A. Rockefeller Institute of Government, Albany, New York, 1999.
2 U. S. General Accounting Office, Arizona Medicaid:Competition Among Managed Care Plans Lowers Program Costs,
October 1995. (GAO/HEHS-96-2).
page iii
Office of the Auditor General
Furthermore, limited followup on identified problems has allowed some problems to
continue. When auditors compared recommendations from reviews conducted in
1999 with reviews conducted 2 years later, they found that problems continued, even
though health plans submitted corrective action plans as AHCCCS required.
AHCCCS expects its reviews to act as a check on how thoroughly plans adopt
needed changes, but auditors found that subsequent reviews did not always cover
all the areas in which problems had been identified. These problems point to a need
to strengthen follow-up efforts by verifying that corrective actions have occurred,
either through a review of applicable documentation or a follow-up visit.
AHCCCS needs to ensure member complaints are
appropriately resolved (see pages 17 through 21)
AHCCCS needs to ensure that all quality-of-care complaints are appropriately
resolved. Currently, AHCCCS refers the complaints it receives to its health plans for
investigation and resolution. When auditors reviewed a sample of such complaints,
they found that, for nearly half of the complaints requiring corrective action, the files
contained no indication that any corrective action had been taken. AHCCCS needs
to take additional steps to ensure that the complaints it refers to health plans are
appropriately resolved.
These problems are exacerbated because AHCCCS continues to refer complaints to
health plans with deficient complaint-handling practices. In its federal fiscal year 2000
and 2001 operational and financial reviews, AHCCCS identified four health plans with
inadequate complaint processes. AHCCCS referred at least 83 complaints to these
four health plans for investigation and resolution after it identified the deficiencies and
before it accepted the health plans’ corrective actions. When it identifies deficient
complaint-handling practices, AHCCCS should take the appropriate action against
the health plan to ensure the deficient practices are addressed. Until corrective action
is taken, AHCCCS should investigate and resolve those complaints it receives rather
than referring these matters to the health plan. AHCCCS should also increase its
monitoring of how these health plans handle the complaints they receive directly.
AHCCCS needs to do more to address concerns with
care for the developmentally disabled (see pages 23
through 27)
AHCCCS needs to do more to ensure that quality-of-care concerns for its ALTCS
developmentally disabled members are addressed. Statute currently requires
AHCCCS to contract with the Department of Economic Security’s Division of
Developmental Disabilities (DDD) to provide services to the State’s developmentally
disabled population. However, AHCCCS has two long-standing concerns with DDD’s
provision of services to its members. One is complaint handling, an area in which
DDD has not met standards since 1996. For example, DDD had not met AHCCCS
requirements to develop a comprehensive, centralized complaint system to track all
member problems and complaints. Additionally, in its 2001 OFR of DDD, AHCCCS
identified problems with DDD’s complaint handling, specifically noting that some
complaints lacked evidence of adequate research and documentation. In response
to AHCCCS’ concerns and requirements, DDD has implemented a complaint-processing
system to capture complaint data statewide. However, while this system
currently captures complaint data on the most severe, high-risk incidents, it does not
yet capture all complaint data. DDD plans on adding other incidents to this system in
the future and is working with AHCCCS to ensure the remainder of the system
development meets AHCCCS requirements. As a result, AHCCCS should continue
working with DDD to implement a complaint-tracking system that meets standards
and expand its review of DDD’s complaint handling.
The second area of concern is the provision of home modification services, such as
wheelchair ramps. AHCCCS has not ensured that DDD has provided services on a
timely basis, hindering members’ ability to function independently in the community.
Auditors found continuing evidence of delays, with DDD failing to meet deadlines for
nearly two-thirds of the 85 modifications reported as approved between January and
May 2002. Although AHCCCS took action in 2000 to address the delays in providing
these services, it has taken limited action to address the current delays. Therefore,
AHCCCS should determine the reasons for these continuing delays as soon as
possible, and if necessary, use its various options such as a notice to cure or financial
sanctions to ensure these services are provided in a timely manner.
Clinical performance indicators provide useful information
(see pages 29 through 34)
AHCCCS uses clinical performance indicators to track how well the system is
delivering services such as immunizations, cancer screenings, and well-child
checkups. These indicators serve several purposes, including assessing health plan
performance and moving the AHCCCS population toward national health goals. For
example, for the most recent 3 years in which data are available, AHCCCS health
plans have continued to improve in the areas of immunizations in 2-year-olds, annual
dental visits for children, and adolescent well-care visits. In contrast, health plans’
performance on children’s access to primary care and influenza immunizations in
nursing facilities has declined.
page iv
State of Arizona
While such indicators are useful, minor changes could enhance their impact.
Because the indicators provide valuable information about how well health plans are
delivering services, AHCCCS should use the indicator results as part of its annual
reviews when assessing health plan performance. In addition, AHCCCS should
expand its followup for health plans that do not meet the established indicator
standards beyond requiring and reviewing corrective action plans. AHCCCS should
request additional documentation that demonstrates that the health plan has
implemented corrective actions and in some cases, conduct site visits to ensure that
actions were implemented.
pagev
Office of the Auditor General
page vi
State of Arizona
page vii
Office of the Auditor General
TABLE OF CONTENTS
continued
Introduction & Background
Finding 1: AHCCCS should strengthen its health plan
reviews
Annual reviews used to monitor quality of care
Reviews can better monitor quality
AHCCCS should strengthen monitoring
Recommendations
Finding 2: AHCCCS needs to ensure member
complaints are appropriately resolved
Complaints identify member concerns
Complaint resolution inconsistently occurs
AHCCCS should address deficient complaint handling
Recommendations
Finding 3: AHCCCS needs to do more to address
concerns with care for the developmentally disabled
DDD serves the developmentally disabled
Complaint-handling concerns continue
Home modifications remain untimely
Recommendations
1
9
9
10
14
15
17
17
18
19
21
23
23
24
25
27
page viii
State of Arizona
Finding 4: Clinical performance indicators provide
useful information
Indicators help monitor progress
AHCCCS periodically reviews indicators
Minor changes could enhance impact
Recommendations
Agency response
Tables:
1 Enrollment and counties served by health plans as of July 2002
2 Office of Medical Management schedule of revenues and
expenditures years ended June 30, 2000, 2001, and 2002 (in
thousands—unaudited)
3 Operational and financial review standards; federal year ended
September 30, 2001
4 Clinical performance indicators required by AHCCCS’ federal fiscal
year 2002 contracts
5 Statewide clinical performance indicator results federal years
ended September 30, 1998 through 2000
TABLE OF CONTENTS
29
29
32
33
34
2
5
11
31
32
concluded
page1
Arizona was the first
state to implement a
managed care system.
Office of the Auditor General
INTRODUCTION
& BACKGROUND
The Office of the Auditor General has conducted a performance audit of the Arizona
Health Care Cost Containment System’s (AHCCCS) methods to monitor quality of
care. This audit, part of a Sunset review of the agency, was conducted pursuant to an
August 9, 2001, resolution of the Joint Legislative Audit Committee and under the
authority vested in the Auditor General by Arizona Revised Statutes (A.R.S) §§41-1279
and 41-2951 et seq. This is the fourth in a series of five audits of AHCCCS. The first
two audits covered the Division of Member Services and AHCCCS’ rate-setting
processes. The remaining two audits in this series will cover AHCCCS’ medical
services contracting practices and provide information on the agency using the
criteria in Arizona’s sunset law.
Overview of AHCCCS’ managed care system
AHCCCS administers Arizona’s managed care Medicaid program and the State’s
healthcare program for low-income Arizonans who do not qualify for Medicaid. While
Arizona became the last state to implement a Medicaid program, it was the first state
to have a managed care Medicaid program. AHCCCS began in 1982 by offering
acute care such as physician services, hospitalization, pharmacy, and laboratory
benefits to its members, and began adding long-term care services such as nursing
facility care and home- and community-based services in 1988. AHCCCS contracts
with health plans to provide medical services for its members. These health plans
then obtain services for AHCCCS members from physicians, hospitals, laboratories,
and other healthcare providers. AHCCCS pays the health plans a fixed amount in
advance each month, called a capitation payment, for each enrolled member,
regardless of the number or level of services provided. From these capitation
payments, the health plans pay the providers for covered services provided to
AHCCCS members. AHCCCS currently contracts with nine plans to provide acute
care services in various locations throughout the State and eight other plans to
provide long-term care (see Table 1, page 2).
Monitoring quality of care an important function
Monitoring the quality of care and services provided within a managed care system
is one of the most critical functions that state Medicaid agencies can perform, as it
helps ensure that members receive needed services. According to the U.S. General
Accounting Office, managed care can create an incentive to under-serve or even
deny beneficiaries access to needed care since plans can profit from not delivering
services.1 According to the Health Care Financing Review, quality monitoring is “…
perhaps one of the most important activities to pursue as the number of beneficiaries
in managed care systems increases…with the economic incentives inherent in
managed care systems, there is the potential for access and quality of care to be
adversely affected. Considering that a significant number of disadvantaged and
vulnerable individuals make up the Medicaid population, the need for effective
monitoring and evaluation of the access and quality of care provided to this
population is particularly apparent.”2 AHCCCS relies primarily on its Office of Medical
page2
AHCCCS conducts an
annual onsite review of
all health plans.
1 U.S. General Accounting Office. Medicaid Managed Care: Challenge of Holding Plans Accountable Requires Greater State
Effort, May 1997. (GAO/HEHS-97-86)
2 Hadley, James P. and Linda F. Wolf. “Monitoring and Evaluating the Delivery of Services Under Managed Care.” Health
Care Financing Review, Washington, Summer 1996.
State of Arizona
Table Enrollment and Counties Served by Health Plans
As of Health Plan Enrollment Counties Served
Acute Care
Arizona Physicians IPA 215,617 All but Gila and Pinal
Mercy Care Plan 172,463 All but Apache, La Paz, Mojave, Navajo
Phoenix Health Plan/Community Connection 65,707 Gila, Maricopa, and Pinal
CIGNA Community Choice 60,540 Maricopa
Health Choice Arizona 57,336 Maricopa, Pima
Maricopa Managed Care 39,545 Maricopa
University Family Care 20,776 Pima
Pima Health Plan 13,922 Pima
Family Health Plan of North
Eastern Arizona (NEAZ)
12,642
Apache, La Paz, Mohave, and Navajo
Total 1 658,548
Long-Term Care
Department of Economic Security—Division of
Developmental Disabilities
13,402
All
Maricopa Long Term Care 7,635 Maricopa
Pima Long Term Care 3,507 Pima, Santa Cruz
Evercare Select 2,952 Apache, Coconino, La Paz, Maricopa,
Mohave, Navajo, Yuma
Mercy Care Plan 2,828 Maricopa
Yavapai County Long Term Care 1,043 Yavapai
Pinal/Gila Long Term Care 1,005 Gila, Pinal
Cochise Health Systems 850 Cochise, Graham, Greenlee
Total 2 33,222
1 Excludes 5,401 members served by Department of Economic Security Comprehensive Medical and Dental program and the 88,994 members
served by the Indian Health Services and Arizona Health Care Cost Containment System (AHCCCS), fee-for-service.
2 Excludes the 1,440 Native Americans served by tribal contractors.
Source: Auditor General staff summary of information on AHCCCS Web site, July 2002.
Table 1 Enrollment and Counties Served by Health Plans
As of July 2002
Management (OMM) to ensure quality of care for its members. As a result, OMM is
generally responsible for evaluating health plan practices for improving quality and
monitoring the care members received.1 AHCCCS uses four primary mechanisms to
accomplish this.
􀁺􇨠 Operational and financial reviews—AHCCCS conducts annual onsite
Operational and Financial Reviews (OFR) of 17 acute and ALTCS health plans to
assess compliance with AHCCCS standards and contract requirements in
several categories: quality of care, grievance and appeals, delivery of services,
and financial management.2 While OMM participates in these reviews, AHCCCS’
Office of Managed Care coordinates the OFR and is also responsible for
reviewing many of the standards. (See Auditor General Report No. 02-XX for
more information about the Office of Managed Care.) Through the OFR,
AHCCCS attempts to maintain a comprehensive understanding of health plan
activities, ensure service delivery and, in the event of deficiencies, provide
technical assistance to resolve the problem and ensure that it will not reoccur.
􀁺􇩑 Quality-of-care complaints—AHCCCS also monitors the care members receive
through quality-of-care complaints. Quality-of-care complaints typically involve
concerns with the medical care members have received, such as substandard
nursing care or difficulty in obtaining medications and services, and can be used
to identify systemic problems and make improvements. Members can send their
complaints to their provider, their health plan, or directly to AHCCCS.
􀁺􇨠 Clinical performance indicators—AHCCCS has established 17 clinical
performance indicators to determine how well the overall healthcare system is
delivering services for specific populations within its membership. For example,
AHCCCS tracks the percentage of its elderly population who receive flu shots
and the percentage of pregnant women receiving prenatal care. By tracking this
information AHCCCS can determine if its population is meeting state and
national healthcare benchmarks. Also, AHCCCS can identify poor performance
for specific indicators and require corrective actions to improve performance at
individual health plans or across several health plans. AHCCCS has established
performance standards for each of these indicators and has incorporated them
into the acute care health plans’ contracts. For a complete list of the clinical
performance indicators, see Table 4, page 31.
􀁺􇩑 Quality management plans—AHCCCS annually reviews each health plan’s
quality management plans to assess the systems the health plans have
established to monitor and improve quality of care. The quality management
plan includes an annual evaluation health plans conduct to measure the
effectiveness of their quality management programs. This evaluation
page3
1 OMM also tracks the utilization of services, preauthorizes high-cost services such as transplants and treatment for severe
head injuries, and oversees contract pharmaceutical services.
2 While AHCCCS contracts with 18 health plans, it does not conduct OFRs of the Department of Economic Security’s
Comprehensive Medical and Dental Program.
Office of the Auditor General
summarizes quality management activities performed throughout the year,
trends identified as a result of these activities, and action taken for improvement.
The quality management plan also includes written measurable objectives the
health plans have developed to improve their quality management programs.
Further, the quality management plan documents various health plan policies
and procedures that address quality management activities, such as complaint
tracking and trending and coordination of member care.
AHCCCS also conducts a number of other activities to monitor quality of care.
Specifically, AHCCCS conducts periodic member and provider satisfaction surveys to
obtain feedback on its healthcare system and members’ assessments of their treatment
for various illnesses, such as diabetes and asthma, to determine the impact of efforts to
improve the care members receive.
OMM staffing and budget
For fiscal year 2002, OMM was authorized 60 FTE and allocated over $3.9 million in
total funding. As illustrated in Table 2 (see page 5), of this amount, approximately $1.3
million was from the General Fund and over $2.3 million came from Title XIX federal
matching funds. The remainder came from the Children’s Health Insurance Program
Fund and the Arizona Tobacco Litigation Fund.
Audit scope and methodology
This audit focused on AHCCCS’ methods to monitor the quality of care provided to
its members. Specifically, auditors reviewed AHCCCS’ Operational and Financial
Review process, its quality-of-care complaint-handling process, its efforts to address
concerns with its DDD long-term care contract, and the clinical performance
indicators AHCCCS has established and tracks.
This report contains findings and recommendations in four areas, as follows:
􀁺􇩁 AHCCCS should increase the impact of its Operational and Financial Reviews
by focusing on health plan performance outcomes, in addition to its review of
plan policies and procedures.
􀁺􇩁 AHCCCS needs to ensure that the quality-of-care complaints it receives are
appropriately resolved.
page4
State of Arizona
􀁺􇩁 AHCCCS needs to do more to ensure that complaints from its ALTCS
developmentally disabled clients are appropriately handled and that home
modification services are provided to this population in a timely manner.
􀁺􇩗 While AHCCCS has established and tracks the performance of 17 clinical
performance indicators that reflect the services provided and the general health
of its member population, minor adjustments to these indicators could enhance
their impact.
Auditors used a number of research methods to study the issues addressed in this
report, including interviewing AHCCCS staff, reviewing the AHCCCS 2000 member
satisfaction survey design and results, conducting a literature review, and attending
two AHCCCS quarterly meetings with acute health plans and two quarterly meetings
page5
Office of the Auditor General
Table 2 Office of Medical Management
Schedule of Revenues and Expenditures
Years Ended June 30, 2000, 2001, and 2002
(in Thousands—Unaudited)
2000 2001 2002
Revenues:
Appropriations:
State General Fund $1,209.1 $1,302.8 $1,286.3
Children’s Health Insurance Program Fund 1 71.1 131.9 143.1
Federal 1,878.9 2,049.4 2,353.4
Tobacco settlement litigation monies 2 4.1 153.0
Total revenues $3,159.1 $3,488.2 $3,935.8
Expenditures:
Personal services $1,782.6 $2,089.6 $2,535.7
Employee-related 349.1 412.2 507.9
Professional and outside services 892.5 837.7 728.3
Travel, in-state 11.6 10.6 15.0
Travel, out-of-state 5.5 7.9 6.0
Other operating 108.6 123.4 139.8
Equipment 9.2 6.8 3.1
Total expenditures $3,159.1 $3,488.2 $3,935.8
1 Consists of monies allocated to the Division for its role in administering the children’s health insurance program. Monies are appropriated
from the Children’s Health Insurance Program Fund and consist of tobacco taxes and federal matching monies for providing health
insurance coverage to uninsured children whose families meet certain income requirements.
2 Consists of the portion of monies obtained from a settlement with the tobacco companies allocated to the Division and used for its role in
administering the Proposition 204 program.
Source: Auditor General staff analysis of financial information provided by the Arizona Health Care Cost Containment System for the years
ended June 30, 2000, 2001, and 2002.
Table 2 Office of Medical Management
Schedule of Revenues and Expenditures
Years Ended June 30, 2000, 2001, and 2002
(in Thousands—Unaudited)
page6
State of Arizona
1 If a health plan does not comply with its contract, AHCCCS may issue a notice to cure, which alerts the health plan of the
deficiency, describes what the health plan must do to be in compliance, and provides a deadline for completing these
tasks.
with ALTCS health plans, during which quality improvement issues were reviewed.
Auditors also reviewed statutes, rules, and policies and procedures. In addition,
auditors used the following methods:
􀁺􇩔 To assess the Operational and Financial Review as a tool to ensure quality,
auditors analyzed a subset of OFR standards selected to reflect those areas
members were most likely to view as important aspects of health service quality
based on an auditor review of literature and AHCCCS member surveys. This
subset was reviewed and amended with input from AHCCCS management. The
subset included 28 of 111 acute standards evaluated in 2001, 16 of 31 ALTCS
standards evaluated in 2001, and 18 of 43 ALTCS standards evaluated in 2000.
Auditors reviewed AHCCCS findings and recommendations regarding health
plans’ performance on these standards and assessed AHCCCS’ evaluation
methods by reviewing the 2001 or 2000 OFR for 17 health plans. For 4 health
plans, auditors also reviewed AHCCCS OFR working papers. Further, auditors
reviewed the 1999 OFR recommendations made for 7 health plans and
compared these recommendations to 2001 OFR results. Finally, auditors
observed AHCCCS employees conducting the quality management and delivery
systems portion of an OFR for an acute health plan and interviewed staff at two
other large health plans.
􀁺􇨠 To assess whether AHCCCS handles quality-of-care complaints appropriately,
auditors reviewed a sample of 40 quality-of-care complaints AHCCCS received
in federal fiscal year 2001, involving two acute and two ALTCS health plans.
Auditors also reviewed the health plans’ files for these 40 complaints, and the
quality complaint investigation and resolution policies and procedures for the
four health plans in the sample, and interviewed these health plans’ staffs on their
complaint-handling processes.
􀁺􇨠 To assess AHCCCS’ ability to ensure the quality of care provided to its
developmentally disabled members, auditors reviewed the two notices to cure
regarding AHCCCS concerns with the Arizona Department of Economic Security
Division of Developmental Disabilities (DDD) complaint-handling system and
provision of home modification services.1 Auditors attended the April and May
2002 meetings held by AHCCCS and DDD to discuss progress on the
complaint-handling notice to cure and reviewed the minutes from the 20
previous meetings that took place between March 2001 and March 2002.
Further, auditors reviewed the 5 DDD-prepared monthly home modification
tracking reports from January 2002 to May 2002 and 12 DDD home modification
files selected from the January 2002 to April 2002 reports. Further, auditors
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Office of the Auditor General
reviewed the 6 DDD OFRs conducted between 1996 and 2001; interviewed DDD
central office and District 1 staff; and reviewed 10 complaints one District 1 local
office received during federal fiscal year 2002.
􀁺􇩔 To assess the clinical performance indicators, auditors reviewed AHCCCS
clinical performance indicator reports from 1998 through 2002; reviewed
corrective action plans from four health plans that did not meet AHCCCS
contract standards; reviewed the 2002 Health Plan Employer Data and
Information Set standards; and researched state and federal health benchmark
standards, including those of the Arizona Department of Health Services.
This audit was conducted in accordance with government auditing standards.
The Auditor General and staff express appreciation to the director and staff of the
Arizona Health Care Cost Containment System, the Office of Medical Management,
and the Office of Managed Care for their cooperation and assistance throughout this
audit.
page8
State of Arizona
page9
Office of the Auditor General
FINDING 1
AHCCCS should strengthen its health plan
reviews
AHCCCS’ annual onsite reviews can be strengthened by increasing the focus of
these reviews on health plan performance outcomes in providing quality care. These
reviews are one of AHCCCS’ key evaluation tools for ensuring that health plans
provide high-quality, accessible health services. However, because these reviews
primarily focus on whether plans have a policy or process in place, rather than on
what the process accomplishes, problems in service delivery may be overlooked.
Additionally, AHCCCS’ followup on identified problems is limited, allowing some
problems to continue. To increase the value of its reviews, AHCCCS should increase
its focus on health plan performance outcomes and strengthen its efforts to ensure
that health plans have corrected deficiencies.
Annual reviews used to monitor quality of care
AHCCCS has established a comprehensive evaluation mechanism, called an
Operational and Financial Review (OFR), to annually review its health plans’
operations. In its state Medicaid Plan, AHCCCS identifies the OFR as a key
mechanism to ensure the quality and effective delivery of health services through its
health plans. These reviews assess the health plan’s compliance with contractual and
AHCCCS requirements as well as the quality and availability of health services. The
OFR’s important components include:
􀁺􇨠 Assessment by a qualified team—AHCCCS assembles highly qualified teams,
typically comprising 10 to 20 AHCCCS personnel, including doctors, nurses, and
accountants, and other analysts who will spend up to 1 week onsite at the health
plan conducting the review. Typical review activities include interviews, observing
processes, policy and procedure reviews, and some file reviews.
An OFR evaluates the
quality of services
provided to members.
􀁺􇩁 Assessments of compliance with numerous standards—For each of its reviews,
AHCCCS evaluates health plan compliance with numerous standards.
Specifically, for the year ending September 30, 2001, AHCCCS evaluated each
acute health care plan on 111 different standards grouped into 9 categories,
while it reviewed four ALTCS health plans on 31 standards grouped into 6
categories. Table 3 (see page 11), provides further information on these review
categories and examples of standards. During the 5-year contract period (1-year
contract with four 1-year renewal options), AHCCCS will conduct both full and
targeted annual reviews. For full reviews, which normally occur during the first
and last year of the contract, AHCCCS reviews all of the standards for each of
its health plans. For targeted reviews, AHCCCS focuses on review categories or
standards of particular current importance, or those that tend to be problematic
for individual health plans.
􀁺􇩁 Action plans when problems are reported—Following the onsite review,
AHCCCS prepares an individual report of its findings and recommendations for
each health plan. For each standard reviewed, AHCCCS determines a score of
full, substantial, partial, or noncompliance and reports it along with any
recommendations for improvement. In most cases, when it makes
recommendations for improvement, AHCCCS requires the health plan to submit
a corrective action plan detailing how it will address the problems identified.
Additionally, AHCCCS sends the complete report to each health plan, while
executive summaries are sent to the U.S. Department of Health and Human
Services, Centers for Medicare and Medicaid Services.
Reviews can better monitor quality
Although AHCCCS has established a comprehensive set of standards, its
assessment methods often focus on ensuring that a policy or process is in place, and
not on how effectively the health plan is providing services or whether the process is
being implemented effectively. To better assess whether members receive the care
and services that health plans are required to provide, AHCCCS should place more
emphasis on performance. To free up staff time for such assessments, AHCCCS may
need to narrow its current set of standards, placing priority on those standards that
matter most for health plan performance and quality of care.
AHCCCS often evaluates policy rather than performance—Auditors
analyzed 28 acute and 16 ALTCS quality-of-care standards and found that for
approximately 40 percent of the standards, AHCCCS’ evaluation was based on
whether the health plan had a process or policy in place, not on whether the desired
outcome was achieved.1 This emphasis on policy and procedure may cause
AHCCCS to miss problems that exist within the system. For example:
page10
State of Arizona
Reviews do not always
assess plan
performance.
1 See Audit Scope and Methodology (pages 4 through 7), for auditors’ methods to select standards.
page11
Office of the Auditor General
􀁺􇩗 Wait times for medically necessary transportation—This standard evaluates
whether health plans provide members with medically necessary transportation
in a timely manner. Sixteen of the 17 health plans received ratings of at least
substantial compliance for this standard because they had a system to monitor
3 Operational and Financial Review Federal Year Ended September 30, 2001
Category
Number
of Standards
Examples
Standards for Acute Care Health Plans
Delivery System 17 Meets minimum network standards for
primary care physicians
Member Services 13 Has adequate number of customer service
representatives to answer telephone
calls promptly
Quality Management 18 Resolves quality-of-care complaints within
established time frame
Maternal/Child Health 9 Ensures members receive timely prenatal
care
Member Rights and Responsibilities 6 Explains service denial reasons in common
language
Grievances and Appeals 9 Has provider manual that contains grievance
process
Utilization Management 21 Makes prior authorization decisions in a timely
manner
Financial Management 13 Meets required financial viability criteria
Health Service Reporting 5 Has policies and procedures addressing
encounter data submission
Standards for Long-Term Care Health Plans
Delivery System 4 Meets service area minimum network
standards for attendant care workers
Member Services and Case
Management
2
Ensures case managers have appropriate
qualifications and meet caseload
standards
Quality Management 3 Aggregates and analyzes member quality- of-care
and complaint data and uses the
results to improve care
Behavioral Health 4 Ensures contractors train case managers and
providers to screen for behavioral health
needs
Administration and Management 8 Appropriately notifies members when services
are denied, terminated, reduced, or
suspended
Financial Management 10 Has adequate procedures for timely and
accurate claims payment or denial
Source: Auditor General staff summary of Arizona Health Care Cost Containment System’s 2001 operational and financial
reviews of health plans.
Table 3 Operational and Financial Review Standards
Federal Year Ended September 30, 2001
page12
State of Arizona
Timeliness of response
to member calls is not
reported.
wait times. However, none of the 17 OFRs included information regarding the
actual transportation wait times, or whether the transportation was provided on a
timely basis. At the same time, member complaint records or satisfaction
surveys indicated that transportation wait times were a source of member
dissatisfaction for six of nine acute health plans.
􀁺􇩍 Members receiving prenatal care—This standard evaluates whether “the health
plan ensures that pregnant members obtain initial prenatal care appointments
within prescribed time frames…” However, data on the percentage of women
receiving prenatal care within prescribed time frames is not considered for
AHCCCS health plan compliance scores, even through AHCCCS collects and
reports this information for a clinical performance indicator. Instead, health plans
are evaluated on whether they have established goals, interventions, and other
procedures to monitor and increase the number of members receiving prenatal
care. Eight of nine acute health plans received ratings of full or substantial
compliance for this standard.
􀁺􇨠 Timely response to member calls—This standard evaluates whether the health
plan has a sufficient number of member service representatives to promptly
handle member telephone calls. Each health plan sets its own standards for call
wait times. AHCCCS assesses this standard by whether: 1) the plan has
established standards for wait times and abandonment rates, 2) the plan
monitors hold times and abandonment rates, and 3) the plan takes action when
standards are not met. Because AHCCCS assesses the health plan’s system to
handle member calls, health plans can receive ratings of full or substantial
compliance regardless of whether calls are answered according to plan
standards. Seven of the nine acute health plans received ratings of full or
substantial compliance for this standard.
In 1997, the U.S General Accounting Office evaluated the mechanisms used to
monitor the adequacy and accessibility of healthcare services in four managed care
states.1 While GAO acknowledged the difficulty in assessing quality of care in
managed care systems, it found fault with current compliance standards used in
these managed care organizations to assess quality of care. Specifically, it found that
plan compliance with contract requirements does not necessarily ensure that
beneficiaries receive the care they need.
OFR evaluation methods should emphasize performance—AHCCCS
should place more emphasis on performance when evaluating health plans, which it
can do by revising its assessment methods to more often focus on health plan
performance outcomes and member quality of care. AHCCCS management has
indicated that it agrees with the change in emphasis and, during the course of this
audit, changed its assessment methods for several important service quality
1 U.S. General Accounting Office. Medicaid Managed Care: Challenge of Holding Plans Accountable Requires Greater State
Effort, May 1997. (GAO/HEHS-97-86). The four states reviewed were Arizona, Pennsylvania, Tennessee, and Wisconsin.
page13
Office of the Auditor General
standards for its 2002 reviews. For example, in February 2002, AHCCCS began to
evaluate health plan data to determine if AHCCCS standards for transportation wait
times are met, in addition to determining whether plans have a system in place to
monitor wait times.
Standards may need to be prioritized—Since assessing performance
outcomes may require increased AHCCCS resources, AHCCCS may need to
prioritize and/or reduce the current number of standards it measures. Generally,
AHCCCS reviews 17 health plans annually and assesses compliance with up to 111
standards for its acute plans and 31 standards for its ALTCS plans. According to
AHCCCS officials, it has adequate staff to conduct these reviews. However, a change
to a more performance-oriented review could require more in-depth work and
analysis and potentially more resources. Therefore, AHCCCS may want a limited set
of core OFR standards, measured across all health plans, with the remainder of the
review focusing on health plan-specific or system-wide areas of concern. Auditors’
review identified a number of sources AHCCCS can consider to identify focus areas
for the OFR each year.
􀁺􇨠 Member complaints—Both the health plans and AHCCCS compile data on the
number and nature of member complaints. Topics of member concern that
appear with high frequency at either AHCCCS or the health plans could become
focus areas for future reviews. For example, AHCCCS and its health plans
received many complaints regarding prescription drugs in 2001. With this
information, AHCCCS could focus on health plan and provider practices for
issuing prescriptions.
􀁺􇩍 Member and provider surveys—AHCCCS and the health plans conduct
member and provider surveys. While AHCCCS does not conduct surveys every
year, individual health plans frequently conduct member and provider surveys on
a variety of topic areas. AHCCCS could review these surveys for specific areas
of concern or current priorities in healthcare and delivery, and address these
areas in its OFR.
􀁺􇩐 Prior-year OFRs—Prior-year OFR finding areas and recommendations can
provide health plan-specific topics for future reviews. For example, 2001 OFRs
identified that six of nine acute care health plans did not ensure that required
interpreter services were available to non-English-speaking members. At the
same time, the AHCCCS member satisfaction survey conducted in 2000
identified that the ability to communicate with the health provider is a critical
component of member satisfaction with healthcare. AHCCCS has included a
review of interpreter availability in the 2002 OFR.
􀁺􇩃 Clinical performance indicator results—AHCCCS collects and tracks data for 17
different clinical performance indicators. While indicator results are not routinely
AHCCCS should
prioritize or reduce the
number of standards.
page14
State of Arizona
reported in the OFR, the clinical performance indicator data provides valuable
information on how well health plans are delivering services. The indicators
include access to care for adults, adolescents, and babies; immunization rates;
and cancer screening efforts for women. AHCCCS could use this information to
identify focus areas for specific health plans. (See Finding 4, pages 29 through
34 for more information on AHCCCS clinical performance indicators.)
AHCCCS should strengthen monitoring
AHCCCS should also strengthen its monitoring efforts to ensure health plan
deficiencies are corrected. Typically, when AHCCCS identifies deficiencies as part of
an OFR, it requires the health plan to develop a corrective action plan, but AHCCCS
does not always verify that the corrective action was implemented. This lack of
followup has allowed some problems to continue.
AHCCCS does not ensure corrective actions are taken—AHCCCS does
not verify whether health plans have implemented corrective actions. Although
AHCCCS obtains corrective action plans and other documentation, such as revised
policies and procedures, the existence of such plans may not ensure that corrective
action has occurred. According to AHCCCS management, in addition to requiring
corrective action plans, followup is ensured by the fact that subsequent OFRs will
review those areas in which the health plan was previously deficient. However,
AHCCCS did not reassess some important 1999 deficiencies in its 2000 OFR of acute
health plans. For example, based on the 1999 OFRs, many acute health plans
needed to implement corrective actions in categories such as quality management
and delivery systems. However, these categories were not reviewed in the 2000 OFR.
Finally, when auditors reviewed the 1999 OFR recommendations made for seven
health plans and compared them to 2001 OFR results, they found that some
problems continued despite the fact that health plans had submitted corrective action
plans to AHCCCS. For example,
􀁺􇨠 In its 1999 OFR of one acute health plan, AHCCCS identified deficiencies with
the health plan’s credentialing of dentists and the implementation of a system to
track whether members receive behavioral health services. The health plan
submitted corrective action plans that detailed how it would resolve these issues.
Nonetheless, AHCCCS did not review dentist credentialing files in the 2001 OFR,
but identified deficiencies with the health plan’s physician credentialing, as well
as its system for tracking members who receive behavioral health services.
AHCCCS ultimately issued a notice to cure to this health plan in November 2001,
for this and other quality management deficiencies.
1999 deficiencies still
existed in 2001 OFRs.
page15
One plan did not have
the required number of
dentists in several
communities.
Office of the Auditor General
􀁺􇩉 In the 1999 OFR of another health plan, AHCCCS identified that the plan did not
meet standards for the required number of dentists in several communities.
Additionally, the plan was not tracking whether members received behavioral
health services. The health plan submitted a corrective action plan specifying
actions it would take to address these concerns. However, in its 2001 OFR,
AHCCCS again found that the plan did not meet standards for the number of
dentists in several communities and for tracking behavioral health services.
AHCCCS should verify health plans’ corrective actions—When OFR
results show that the health plan needs to correct deficiencies that substantially
impact member health or service quality, AHCCCS should verify that corrective
actions have occurred. In its 1997 report, the U.S General Accounting Office found
that the success of healthcare quality oversight depends on whether the state’s
monitoring efforts are independent and systematic, and go beyond plan-reported,
paper-based indications of compliance. AHCCCS does not meet this standard.
AHCCCS should verify corrections have been made though either: 1) documentation
that provides evidence of implementation or, 2) through a follow-up visit to the
contractor. For example, some of the areas identified for corrective action in the 2001
OFRs that may warrant AHCCCS’ more timely and thorough followup include:
􀁺􇨠 One acute and one ALTCS health plan do not have adequate systems to monitor
and resolve member complaints;
􀁺􇨠 Six of nine acute health plans are not ensuring that required interpreter services are
available to members; and
􀁺􇨠 An ALTCS health plan is not conducting the required quality oversight of its group
homes, behavioral health facilities, and other home- and community-based services.
Recommendations
1. AHCCCS should modify its annual operational and financial reviews of health plans
to focus more on evaluating health plan performance outcomes.
2. If AHCCCS increases its focus on health plan performance outcomes in its OFRs,
which may require increased resources, AHCCCS should prioritize and consider
reducing the overall number of OFR standards that it evaluates during each
operational and financial review.
3. AHCCCS should enhance its follow-up efforts to ensure that health plans resolve the
problems identified in the operational and financial reviews, including obtaining
evidentiary documentation and conducting more frequent follow-up visits when
necessary to verify that corrective actions have occurred.
page16
State of Arizona
page17
Office of the Auditor General
FINDING 2
AHCCCS needs to ensure member complaints
are appropriately resolved
AHCCCS needs to ensure that all complaints it receives regarding quality of care are
appropriately resolved. Currently, AHCCCS refers the complaints it receives to its health
plans for investigation and resolution. When auditors reviewed a sample of such
complaints, they found that, for nearly half of the complaints requiring corrective action,
the files contained no indication that any corrective action had been taken. AHCCCS
should follow up on complaints it refers to health plans to ensure they are appropriately
resolved. AHCCCS also continues to refer complaints even in those cases where plans
appear to have deficient complaint-handling practices. Where it has identified deficient
complaint-handling practices, AHCCCS should work with the health plan to develop an
acceptable complaint-handling system and in the meantime, investigate and resolve
complaints it receives, rather than referring these matters to the health plans.
Complaints identify member concerns
Complaints serve as one mechanism to identify member concerns and make
improvements. According to the Center for Health Care Strategies, Inc., complaints
highlight how well customer satisfaction is being addressed and can provide early
warnings of potential systemic problems.1 Within the AHCCCS system, complaints
pertaining to the quality of care a member received, such as substandard nursing care or
difficulty getting medications and services, can be sent either to the health plan or directly
to AHCCCS. However, when AHCCCS receives quality-of-care complaints, it refers them
to the appropriate health plan for investigation and resolution. AHCCCS requires health
plans to investigate complaints it receives since it views the investigation and resolution
of member complaints as a health plan function. AHCCCS states that it is confident
relying on health plans to investigate and resolve these complaints because it ensures the
AHCCCS refers
complaints to health
plans for investigation
and resolution.
1 Verdier, James, and others. Using Data Strategically In Medicaid Managed Care. Center for Health Care Strategies, Inc.,
Chapter 4: Other Data Sources and Uses, 2002. [electronic version]
page18
State of Arizona
AHCCCS does not
consistently document
the appropriate
resolution of its
complaints.
1 Auditors reviewed ten complaints each from four health plans—two of which serve acute care members and two of which
serve ALTCS members. AHCCCS received these complaints during federal fiscal year 2001.
adequacy of the plans’ complaint-handling processes through the annual OFR. While the
health plans will independently investigate complaints, AHCCCS’ policy is to require
updates on the progress of investigations, provide direction on these investigations, and
require health plans to report on the complaint’s disposition.
AHCCCS receives several hundred quality-of-care complaints annually. Specifically,
for federal fiscal year 2001, AHCCCS reports that it directly received approximately
410 potential quality-of-care complaints from a variety of sources, including
members, providers, elected officials, and AHCCCS staff. AHCCCS referred most of
these complaints to the appropriate health plans for investigation and resolution.
However, AHCCCS does investigate and resolve a small number of complaints that
it receives involving members who are not served by a health plan.
AHCCCS has also developed and recently implemented a database to track all of
the complaints that it receives. In October 2001, AHCCCS began entering
information related to the nature and resolution of complaints it receives into this
database, whether investigated and resolved by the health plan or AHCCCS. With
this complaint information, AHCCCS will be able to identify trends and work to
resolve any systemic problems these trends identify.
Complaint resolution inconsistently occurs
AHCCCS’ approach does not ensure complaints are appropriately resolved and
changes are implemented to help prevent similar problems from reoccurring. Auditors’
review of complaint files found that neither AHCCCS nor the plans consistently ensure
that complaints AHCCCS refers are appropriately resolved. Therefore, AHCCCS should
follow up and document that necessary corrective actions have been implemented for all
of the complaints it receives.
AHCCCS cannot ensure all complaints are appropriately resolved—
While it appears appropriate for AHCCCS to refer the quality-of-care complaints it
receives to health plans for investigation and resolution, the steps AHCCCS is using do
not ensure that members’ concerns or systemic problems identified are appropriately
resolved. Auditors’ review of 40 complaints found no assurance that AHCCCS or the
health plans consistently document the appropriate resolution of member concerns and
implementation of corrective actions.1 Twelve of the 28 complaint files reviewed that
required corrective actions lacked documentation that the health plan addressed
member concerns and took necessary corrective actions. The following examples
illustrate complaints for which evidence of appropriate resolution could not be located in
AHCCCS’ or the health plans’ files.
􀁺􇨠 Inappropriate use of pain medications—In March 2001, AHCCCS received a
complaint from a doctor’s office regarding a member who was inappropriately
page19
Office of the Auditor General
seeking prescription pain medications. After the complaint investigation identified an
abnormal pattern of prescribing medications for this member, the health plan
informed AHCCCS of several actions it planned to take to address the member’s
needs and prevent this situation from reoccurring. These actions included: 1)
identifying the specific physicians who contributed to the member’s over-utilization
of prescriptions; 2) sharing the drug utilization profile with these physicians; 3)
contacting the member’s new doctor to alert him of the member’s prior history and
discuss a treatment plan; and 4) limiting the member to one pharmacy. However,
AHCCCS’ and the health plan’s files lacked evidence that any of these actions
were taken.
􀁺􇨠 Poor monitoring of patient’s blood sugar levels—In December 2000, AHCCCS
received a complaint regarding a facility that was not properly documenting and
monitoring care to address a member’s blood sugar levels. The health plan’s
investigation determined that the facility did not properly follow physician orders,
and the plan informed AHCCCS that the facility would: 1) develop a policy
regarding nursing interventions for episodes of hyperglycemia and
hypoglycemia; 2) train nursing staff on this policy; and 3) train nursing staff on
the facility’s policies for following physician orders and documenting care. While
documentation in AHCCCS’ file indicates that the health plan would follow up
with the facility on the new policy and trainings, auditors found no evidence in
AHCCCS or plan files that these actions occurred.
AHCCCS needs to ensure its complaints are resolved—AHCCCS
should ensure that corrective actions are implemented for all complaints it receives.
Specifically, AHCCCS should obtain documentation and confirm that appropriate
corrective actions have been taken. In some instances, contacting the complaint
originator may be the best way for AHCCCS to confirm that the concern has been
resolved. However, in other instances, AHCCCS needs to work with the health plan to
obtain evidence of corrective actions, such as copies of policies or training
attendance records. Whether contacting the complainant directly and/or requiring
evidence from the health plan, AHCCCS should follow up as long as necessary to
ensure that complaints are appropriately resolved. In many cases, AHCCCS should
be able to obtain this information through phone calls or letters.
AHCCCS should address deficient complaint handling
In addition to ensuring that complaints are resolved, AHCCCS should investigate and
resolve the complaints it receives when it has previously identified concerns with
health plan complaint-handling practices, and take action to remedy these practices.
Even though AHCCCS has identified problems with the complaint-handling
processes of 4 of 17 its health plans, it has continued to refer complaints to these
plans for investigation and resolution. To better ensure appropriate complaint
AHCCCS should
confirm that its
complaints have been
appropriately resolved.
page20
State of Arizona
investigation and resolution, if AHCCCS identifies health plan complaint-handling
problems, it should work with the health plan to address these problems, but also
investigate and resolve the complaints it receives until these problems are addressed.
Additionally, AHCCCS should enhance its monitoring of the complaints received
directly and investigated by health plans with deficient complaint-handling processes.
Complaints referred to plans with inadequate processes—AHCCCS
continues to refer complaints it receives to health plans for investigation and
resolution even in those instances in which it has identified deficiencies with these
plans’ complaint-handling processes. Examples of the four plans that were found to
have inadequate complaint-handling processes include the following:
􀁺􇩉 In 2001, AHCCCS found several problems with a health plan, including concerns
with how it documents and responds to complaints. Specifically, AHCCCS noted
that complaints were not thoroughly researched and properly resolved to prevent
their reoccurrence.
􀁺􇨠 In 2001, AHCCCS found that a different health plan failed to document resolution
for 11 (73.3 percent) of 15 complaints reviewed. For example, one complaint was
labeled as an unexpected death and closed without the health plan receiving
medical records or other documentation regarding the circumstances of the
death. In another two complaints, the files did not contain documentation of the
health plan following up on the concerns it had identified.
Despite these deficiencies, AHCCCS’ complaint databases show that it referred at
least 83 complaints to these 4 health plans for investigation and resolution after
AHCCCS identified deficiencies with their complaint-handling processes and before
it accepted the health plans’ corrective actions. Fifty-four of these complaints were
referred to one health plan.
AHCCCS should increase its oversight and handle its complaints—
When AHCCCS has identified significant problems with a health plan’s complaint-handling
process, it should take appropriate action against the health plan. This
action could include a formal notice to cure, which would require specific corrective
actions within a specified time period, or financial sanctions. Further, until problems
are resolved, AHCCCS should investigate and resolve the complaints it receives.
Even though health plans are required to investigate and resolve these complaints,
AHCCCS is ultimately responsible to ensure complaints are properly investigated and
member concerns addressed.
Further, for those health plans with complaint-handling deficiencies, AHCCCS should
also increase its monitoring of how the health plan handles the complaints it receives
directly. This monitoring could include AHCCCS requesting periodic reports from the
health plan about complaints the plan receives and reviewing how they were handled.
If through monitoring, AHCCCS continues to have concerns with the health plan’s
AHCCCS continues to
refer complaints to its
health plans even after
identifying deficient
processes.
page21
Office of the Auditor General
process, AHCCCS should work with and educate the plan on how to properly
investigate and resolve these complaints.
AHCCCS may need additional resources to handle its complaints and increase its
oversight of the way health plans handle complaints. Once AHCCCS has
implemented these recommendations and assessed their impact on its workload,
AHCCCS should determine if additional resources are needed and, if so, whether the
State or the health plans with deficient complaint-handling processes should pay for
them.
Recommendations
1. AHCCCS should ensure that complaints are appropriately resolved by obtaining
evidence that the member concern has been addressed and, when appropriate,
changes have been implemented to help prevent similar problems from
reoccurring. Where appropriate, AHCCCS should contact the complainant to
determine if the concern has been satisfactorily addressed.
2. In those instances where AHCCCS has identified significant problems with a
health plan’s complaint-handling process, AHCCCS should:
a. Take appropriate action against the health plan for its failure to properly
investigate and resolve complaints, possibly including a formal notice to
cure, which would require corrective actions within a specified time period,
or financial sanctions.
b. Investigate and resolve the complaints it receives rather than refer them to
the health plan until the plan has implemented a complaint-handling system
that meets AHCCCS’ requirements.
c. Increase its monitoring of how the health plan handles the complaints they
receive directly until the plan has demonstrated its ability to adequately
investigate and resolve complaints.
Where deficiencies are
identified, AHCCCS
should handle
complaints and increase
its oversight.
page22
State of Arizona
page23
Office of the Auditor General
FINDING 3
AHCCCS needs to do more to address concerns
with care for the developmentally disabled
AHCCCS needs to do more to ensure that quality-of-care concerns for its ALTCS
developmentally disabled members are addressed. Statute currently requires
AHCCCS to contract with the Department of Economic Security’s Division of
Developmental Disabilities (DDD) to provide services to the State’s developmentally
disabled population. However, AHCCCS has two long-standing concerns with DDD’s
provision of services to its members: complaint handling and tracking and the
provision of home modification services. Since 1996, DDD has not met AHCCCS’
standards for complaint tracking and resolution. Because AHCCCS is ultimately
responsible for ensuring that members’ complaints are appropriately resolved,
AHCCCS should expand its review of DDD’s complaint handling until DDD complies
with these standards. Additionally, AHCCCS has not ensured that DDD provides
home modification services, such as wheelchair ramps, in a timely manner. Although
AHCCCS took action in 2000 to address the delays in providing these services, it has
taken limited action to address the current delays in providing these services to its
members.
DDD serves the developmentally disabled
Statute currently requires DDD to oversee services to the State’s developmentally
disabled population. As a result, AHCCCS must contract with DDD to provide
services for its developmentally disabled Arizona Long Term Care System (ALTCS)
members. Nearly 40 percent of AHCCCS’ total ALTCS population (13,402 people) is
developmentally disabled and served by DDD.
Since statute requires that DDD serve this population, AHCCCS’ options for ensuring
that DDD is in compliance with contractual requirements are limited. As with other
plans, if DDD does not comply with its contract, AHCCCS can issue what is called a
DDD serves nearly 40
percent of AHCCCS’
ALTCS population.
page24
State of Arizona
DDD has not complied
with AHCCCS’
complaint-handling
requirements for several
years.
“notice to cure,” which describes what the health plan must do to be in compliance,
and provides a deadline for completing these tasks. However, AHCCCS’ tools for
enforcing this notice to cure are more limited for DDD than for other plans. If other
plans do not comply, AHCCCS can issue a fine, cap enrollment, or terminate the
contract. Since DDD is the only health plan allowed to serve the developmentally
disabled, AHCCCS can impose fines, but cannot cap enrollment or terminate the
contract.
Complaint-handling concerns continue
DDD’s complaint-handling process has not met AHCCCS’ contractual standards for
many years. Until DDD meets AHCCCS standards, AHCCCS should expand its
review of DDD’s complaint handling and continue to help the division reach
compliance with complaint-tracking and resolution standards.
Complaint-handling has not met standards since 1996—DDD’s
complaint-handling process has not met AHCCCS’ contractual standards for many
years. AHCCCS requires its health plans to track all member problems and
complaints and analyze the information to prevent similar problems from reoccurring.
However, DDD’s complaint-handling process has not met these standards since
1996, according to AHCCCS Operational and Financial Reviews. In December 2000,
AHCCCS issued a notice to cure, stating, among other things, that DDD had
“consistently failed to meet the complaint tracking and resolution standards
contained in their contract with AHCCCS….” and that “These standards have
repeatedly been out of compliance in past reviews.”
DDD has not carried out all of the actions AHCCCS required in its December 2000 notice
to cure. Specifically, AHCCCS’ notice required DDD to develop a comprehensive,
centralized, statewide written complaint system that aggregates all complaint data
statewide by June 15, 2001. DDD’s current complaint process is decentralized, with most
complaint information located in files spread across approximately 40 local offices.
Complaint information and investigation details are often also separate—partly in
members’ files, and partly in investigators’ files. DDD failed to meet the June 2001
deadline but, as discussed further below, it is currently working on a system to meet
AHCCCS requirements.
As a result of DDD’s inadequate progress in addressing the quality-of-care issues
identified in the December 2000 notice to cure, AHCCCS imposed a financial sanction of
$6,000 in February 2001. The notice to cure also remains in effect as of May 2002. In
addition, AHCCCS discovered another problem in its 2001 OFR. It found DDD in
noncompliance with the standard to appropriately respond to complaints and evaluate
the effectiveness of actions taken to improve care. AHCCCS found that four of the ten
page25
Office of the Auditor General
complaints it reviewed at the central office did not meet this standard and that some
lacked evidence of adequate research and documentation.
AHCCCS should expand its review of DDD complaint handling—
Because AHCCCS is ultimately responsible for ensuring that member complaints are
appropriately resolved, AHCCCS should continue to assist DDD in implementing an
acceptable system that captures all complaints and increase its complaint
monitoring. In response to the notice to cure, DDD began developing a computerized
complaint-tracking system that currently captures the most severe high-risk incidents,
such as abuse, accidental injury, and neglect. DDD plans on adding other incidents,
such as medications being given to the wrong person or medications not being given
at all, to this system. However, DDD’s system will still not contain all complaints or
quality-of-care concerns. As such, DDD has developed a work plan to ensure that the
remainder of its system development meets AHCCCS requirements. AHCCCS
reviewed this work plan in August 2002 and provided direction to DDD on additional
steps it should take to meet AHCCCS’ requirements. Because AHCCCS has
expertise in these systems, it should continue to work with DDD to help it develop a
system that meets standards.
Additionally, AHCCCS should expand its review of DDD complaint files during its
OFRs. Specifically, AHCCCS should review complaint files not only from the central
office, as it currently does, but from the local offices as well to ensure that all types of
complaints are being handled appropriately. The central office complaints are limited
to cases referred by AHCCCS to DDD for investigation. Because AHCCCS directs
DDD on issues that should be further investigated on these complaints, they are not
representative of how the majority of complaints DDD receives are handled.
Reviewing complaints handled by DDD’s local offices would provide AHCCCS with a
more accurate assessment of DDD’s complaint-handling practices. If AHCCCS
determines, as a result of these reviews, that DDD is not handling complaints
appropriately, it needs to determine what corrective action is necessary.
Home modifications remain untimely
In many instances, DDD has not provided timely home modification services that
enable AHCCCS’ developmentally disabled members to remain independent.
AHCCCS contractually requires DDD to provide timely home modifications, such as
roll-in showers and wheelchair ramps, to its members. However, DDD has not met the
approval time frames in nearly two-thirds of the cases reviewed. Providing timely
home modifications to AHCCCS members has previously been a concern and while
AHCCCS took action in 2000 to address this concern, it has taken limited action to
address the current problem. Therefore, AHCCCS should take the necessary actions
to ensure modifications are provided in a timely manner, and provide additional policy
direction to DDD regarding home modification requests.
AHCCCS should
expand its review of
DDD complaint
handling.
page26
State of Arizona
Home modifications delayed—DDD’s contract with AHCCCS calls for home
modification projects to be approved within 90 days of a request, with service
provision to occur within 150 days. However, based on a review of the January 2002
through May 2002 monthly tracking reports, of the 85 home modifications reported
as approved, 55 (65 percent) took longer than 90 days to approve. On average, it
currently takes DDD about 118 days to approve a home modification. As a result of
approval delays, 44 percent of the 64 modifications processed within this period took
more than the AHCCCS maximum of 150 days to complete.
Delays in providing medically necessary modifications may hinder AHCCCS’
developmentally disabled members’ ability to function independently in the
community and place them in potentially unsafe environments. Under 42 U.S.C.
§1396(2), state Medicaid programs must provide service that helps members retain
their independence. However, based on a review of 12 DDD modification cases that
took more than 90 days to approve, auditors identified examples of members whose
independence was hindered and whose safety and care, as well as their providers’
safety, were potentially affected. These included examples of a woman and a boy
who each waited over 8 months for the completion of modification to assist with
bathing and access to important areas of their homes.
Untimely provision of medically necessary home modifications has been a problem
for DDD in the past and untimely provision resulted in AHCCCS issuing a notice to
cure in April 2000. At that time, DDD had 112 modifications that had not been
completed. DDD eventually completed all 112 modifications and AHCCCS lifted the
notice in March 2001.
AHCCCS needs to ensure timely modifications—AHCCCS should take
action to ensure ALTCS members receive timely home modifications. After AHCCCS
lifted the notice to cure in March 2001, it required DDD to submit monthly modification
tracking reports so it could monitor the timely provision of modification services.
Although these reports have shown delays since at least January of 2002, AHCCCS
has not taken further action against DDD and stated it would not know if the delays
are justified until it conducts its OFR in September 2002. However, given the number
of delays and DDD’s history in providing untimely home modification services,
AHCCCS should review DDD’s home modification files as soon as possible to
determine if the delays are justified. If they are not, AHCCCS should use its various
options, such as another notice to cure or financial sanctions, to see that DDD
provides these services in a timely manner.
AHCCCS should reconfirm policy direction—Additionally, AHCCCS should
reconfirm its previous direction given to DDD regarding home modification requests.
Specifically, AHCCCS may need to further clarify for DDD at which point or date the 90-
day approval time frame begins. Based on auditors’ review of the January 2002 through
May 2002 monthly tracking reports, DDD revised the home modification request date or
“need identified” date for numerous home modification requests. Although AHCCCS sent
AHCCCS should
consider additional
actions to see that DDD
completes home
modifications in a timely
manner.
Forty-four percent of the
home modifications
took over 150 days to
complete.
page27
Office of the Auditor General
a letter to DDD in April 2002 directing DDD to use the date that the member makes the
request, DDD states that further clarification would be helpful.
Additionally, AHCCCS needs to specify under what circumstances DDD can close home
modification requests. Auditors’ review of the monthly tracking reports found that DDD
closed eight home modification requests when the member did not provide
documentation supporting the medical necessity of the request in a timely manner.
However, according to an AHCCCS official, it is inappropriate for DDD to close a home
modification request for this reason as DDD is responsible for obtaining the necessary
documentation. As a result, AHCCCS should provide direction to DDD on this issue. In
the meantime, DDD has instituted additional mechanisms to track whether the necessary
documentation has been provided and/or to obtain the necessary documentation in a
timely manner.
Recommendations
1. AHCCCS should continue to help DDD develop a centralized complaint-handling
system that meets standards.
2. AHCCCS should increase its monitoring of DDD complaints by reviewing files
not only from the central office, as it currently does, but also from the local offices
to ensure that all types of complaints are being handled appropriately.
3. AHCCCS should review DDD’s home modification files as soon as possible to
determine if delays in providing home modification services are justified.
4. If AHCCCS determines that DDD’s delays in providing home modification services
are not justified, AHCCCS should use its various options, such as another notice to
cure or financial sanctions, to see that DDD provides these services in a timely
manner.
5. AHCCCS should provide direction to DDD on which date the 90-day home
modification approval time frame begins and under what circumstances home
modification requests may be closed.
page28
State of Arizona
page29
Office of the Auditor General
FINDING 4
Clinical performance indicators provide useful
information
In addition to conducting annual reviews and monitoring complaints, AHCCCS uses
clinical performance indicators to track how well the system is delivering services that
help to keep members healthy. These indicators cover such services as
immunizations, cancer screenings, and well-child checkups. AHCCCS also
periodically reviews the indicators to ensure they present meaningful information on
the health care provided to AHCCCS members. While such indicators are useful,
some changes could enhance their impact. First, because the indicators provide
valuable information about how well health plans are delivering services, AHCCCS
should use them as part of its annual OFR assessments. Second, AHCCCS should
take additional steps to ensure that corrective action is taken when indicator results
show problems with individual health plans.
Indicators help monitor progress
AHCCCS currently collects data on 17 clinical performance indicators that span a variety
of services. These indicators are helpful both in assessing how individual plans are
performing and in helping AHCCCS determine how Arizona’s program is progressing in
meeting national goals.
Current indicators cover a wide variety of services—AHCCCS requires
health plans to submit information on 17 clinical performance indicators, such as the
percentage of low-birth weight babies and the percentage of elderly members receiving
flu shots. Most of these indicators are based on the Health Plan Data and Information Set
(HEDIS). HEDIS is a standardized set of performance measures used by employers and
consumers to compare the quality of care rendered by managed care organizations.
HEDIS has become the standard for assessing managed care organizations’
performance, with almost 90 percent of such organizations collecting and reporting
HEDIS results.
page30
State of Arizona
AHCCCS health plans are contractually required to meet minimum
performance standards for each of the indicators as well as continually
improve their performance from year to year. These requirements are
conveyed in three performance levels incorporated into contracts with
plans providing acute care services (refer to the text box for a description
of these performance levels).1 For example, the minimum performance
standard for cervical cancer screening calls for providing at least one Pap
smear within a 3-year period to at least 57 percent of enrolled women aged
16-64. Beyond this minimum standard, the plan must keep making
progress to a goal of 60 percent and an eventual benchmark of 85 percent.
Table 4 (see page 31) shows the 17 clinical performance indicators and the
levels of performance stipulated for each one. The current set of
performance standards and performance levels pertains only to health
plans that provide acute care. However, AHCCCS has incorporated such
standards and measures into its next contracts with long-term plans, which
will start in federal fiscal year 2003.
Indicators track individual plans’ performance—One
purpose of the indicators is to track individual health plan performance.
When an acute care health plan has not shown demonstrable and
sustained improvement toward meeting contractual performance
standards for the clinical performance indicators listed on Table 4 (see
page 31), AHCCCS requires the plan to submit a corrective action plan.
These plans typically involve the health plan analyzing its operations for
possible causes or links to the poor performance and devising
strategies to improve it. For example, as a strategy to reduce the
percentage of low-birth weight deliveries, one health plan determined it
would provide case management services to high-risk pregnancies.
Another health plan strategy to affect its indicator results is to advertise
$50 gift certificates to pregnant women who show up for at least five
prenatal visits.
Indicators assess progress toward national goals—Even
though AHCCCS has established three levels of performance for its indicators, it
ultimately strives to reach national health goals. The benchmarks that health plans
should target are derived from the U.S Department of Health and Human Services’
Office of Public Health and Science, “Healthy People 2010” initiative. Healthy People
began in 1979 as a comprehensive, nationwide health promotion and disease
prevention agenda. It is designed to serve as a road map for improving the health of
all people in the United States and has two main goals: to increase the quality and
years of healthy life and to eliminate health disparities. Arizona has a similar statewide
health agenda called “Healthy Arizona 2010,” which is based on the national model.
As illustrated in Table 5 (see page 32), AHCCCS’ success at moving its population
toward these benchmarks has been mixed. Of the 14 indicators for which historical
Clinical Performance Indicator
Standards
Minimum Performance Standard
This standard represents the minimally
expected level of performance. In
deriving this standard, AHCCCS
considers the existing statewide average
and the high and low health plan results
from previous years. If a health plan
does not achieve this standard for 2
consecutive years, it may be subject to
sanctions. This standard can change as
the statewide average changes.
Goal
The goal represents the next step for
those health plans that have met the
minimum standard but have not yet
achieved the benchmark. The goal can
also change as the minimum
performance standard changes.
Benchmark
The benchmark represents the ultimate
standard to be achieved and is
generally based on the Healthy People
2000 or Healthy People 2010 initiative,
whichever is the most current for the
indicator.
1 Prior to October 2001, AHCCCS’ Acute Care contract had only one performance level required of health plans. This level
was typically based on the statewide average.
page31
Office of the Auditor General
Table 4 Performance Indicators
Federal Year Ending September 30, 2002
Percentage of Population
Performance Indicator
Description
Statewide
Average
AHCCCS
Goal
National
Benchmark
Acute Care
Low-birth weight deliveries1 Babies born under 2,500 grams1 8.2%1 7.5%1 5% 1
Well-child visits in the first 15
months
Children who received at least six well-child
visits in the first 15 months of life
58.3 64 90
Immunizations in 2-year-olds
Children who received series of five
different vaccines by 24 months of
age
65.0 73 90
Well-child visits in 3- to 6-year-olds
Children who received at least one well-child
visit within reporting year
44.5 64 80
Children’s access to primary
care providers (PCP)
Children ages 1-20 years who received
at least one PCP visit during reporting
year
72.9 80 95
Adolescent well-care visits Adolescents ages 11-20 years who
received at least one well-care visit
during 2-year reporting period
49.0 49 50
Annual dental visits Members ages 3-20 years who had at
least one dental visit within reporting
year
43.5 55 90
Prenatal care in the first
trimester
Women who had a prenatal care visit
during the first trimester of pregnancy
55.2 65 90
Breast cancer screening Women ages 52-64 who received a
mammogram during 2-year reporting
period
56.1 60 60
Cervical cancer screening Women ages 16-64 who received a Pap
smear during 3-year reporting period
54.7 60 85
Adult access to ambulatory and
preventative care services
Members ages 21-64 who received at
least one preventative visit during the
reporting year
77.9 80 95
Long-Term Care2
Initiation of home- and
community-based (HCB)
services
Newly enrolled members in a HCB
setting who received services within
30 days of enrollment
87.0 100 N/A
Influenza immunizations in
nursing facilities (NF)
Members living in NF who received an
influenza immunization
82.7 90 90
Influenza immunizations in
home- and community-based
(HCB) settings
Members living in HCB settings who
received an influenza immunization
50.5 90 90
Pneumonia vaccinations in
nursing facilities (NF)
Members living in NF who received a
pneumonia vaccination
69.6 90 90
Pneumonia vaccinations in
home- and community-based
(HCB) settings
Members living in HCB settings who
received a pneumonia vaccination
43.9 90 90
Diabetes indicator3 Diabetic members who receive three
types of assessment services
N/A N/A N/A
1 For the low-birth weight deliveries indicator, a lower percentage indicates better performance; for all other indicators, a higher percentage
indicates better performance.
2 Long-term care indicators do not apply to the developmentally disabled population.
3 Data is not cited because comparison information is not yet available.
Source: Auditor General staff summary of data from the Arizona Health Care Cost Containment System’s 2000 through 2002 performance
indicator reports and analysis of AHCCCS’ acute care contracts for federal year 2002.
Table 4 Clinical Performance Indicators Required by
AHCCCS’ Federal Fiscal Year 2002 Contracts
page32
State of Arizona
AHCCCS’ success in
reaching national health
goals has been mixed.
data is available, 5 showed improvement. For example, pneumonia vaccinations in
nursing facilities, immunizations of 2-year-olds, and annual dental visits all improved
over a 3-year period. In contrast, breast and cervical cancer screenings, low-birth
weight deliveries, and well-child visits for 3- to 6-year-olds fluctuated within this time
frame. Finally, performance on children’s access to primary care and influenza
immunizations in nursing facilities declined.
AHCCCS periodically reviews indicators
Because the indicators help monitor how well the system is delivering services, AHCCCS
periodically reviews them to ensure they are providing meaningful information to its health
plans. For example, AHCCCS recently replaced two of its ALTCS indicators, prevalence
Table 5 Statewide Clinical Performance Indicator Results1
Federal Years Ended September 30, 1998 through 2000
Improved Results Mixed Results Decline in results
Well-child visits up to 15 months
Immunizations in 2-year-olds
Prenatal care in the first
trimester
Children’s access to primary
care providers2
Adolescent well-care visits
Low-birth weight deliveries
Influenza immunizations in nursing
facilities3
Annual dental visits
Well-child visits in 3- to 6-year-olds
Cervical cancer screening
Pneumococcal vaccination in
nursing facilities
Breast cancer screening
Adult access to ambulatory
and preventative care
Influenza immunizations in
home- and community-based
settings
1 The Arizona Health Care Cost Containment System (AHCCCS) has 17 clinical performance indicators; however, results are presented for only
those indicators for which 3 consecutive years of data were available.
2 Although the results of this indicator declined, the results remained above AHCCCS’ goal.
3 In 2000-2001, there was a vaccine shortage which could have contributed to the decline.
Source: Auditor General staff analysis of AHCCCS statewide clinical performance indicator results for federal fiscal years 1998 through 2000.
Table 5 Statewide Clinical Performance Indicator Results1
Federal Years Ended September 30, 1998 through 2000
page33
Office of the Auditor General
AHCCCS should
enhance its followup to
ensure corrective
actions are
implemented.
of bedsores and fractures related to falls, because it felt its efforts would be better served
in other health areas. Specifically, the prevalence of bedsores on the elderly indicator
showed substantial improvement over time. The fractures related to falls indicator showed
no trend and therefore provided limited information to health plans. In addition, although
HEDIS has dropped the low-birth weight indicators, AHCCCS has indicated it will
continue to track this information because continuing to track low birth weight helps
identify opportunities to improve birth outcomes and reduce costs.
In addition, AHCCCS may be revising its indicators in the future to comply with a proposal
for national mandated Medicaid performance indicators. As a result of increased federal
pressure to report on the performance of Medicaid programs and the need for
comparable state-to-state information, the Centers for Medicare and Medicaid Services
(CMS) has convened the Performance Measurement Partnership Project. This project is
a collaborative effort between the National Academy for State Health Policy and federal
and state officials to explore whether a consensus can be reached on developing a
limited core set of performance measures for all Medicaid programs. AHCCCS is one of
15 states asked to participate in selecting, collecting, and reporting a core set of
performance measures. Final recommendations to CMS on the development of this core
measurement set are scheduled to be submitted in September 2002.
Minor changes could enhance impact
While the indicators offer valuable information about the quality of care for AHCCCS
members, minor changes could enhance their impact. First, because the indicators
provide important information at the health plan level, AHCCCS should use the indicator
results when assessing health plan performance during its OFR process. In addition,
AHCCCS should take additional steps to ensure that health plans implement their
corrective action plans when indicator results do not meet AHCCCS standards.
AHCCCS should use indicator results during OFR—Because the clinical
performance indicators provide valuable information about the performance of
individual health plans, AHCCCS should incorporate these results into its OFR report
and use the information when assessing performance. As indicated in Finding 1 (see
pages 9 through 15), one of the OFR’s primary goals is to ensure the effective delivery
of health services. While the indicators provide important information in this area, they
are not routinely used during the OFR when judging health plan performance. If
AHCCCS implements the recommendations in Finding 1 (see page 15) and begins
moving the OFR from a process-oriented, strict compliance review of health plans to
a more performance-oriented review, indicator results can provide readily available
information about performance.
page34
State of Arizona
AHCCCS should expand followup—To ensure that health plans address
substandard performance related to these standards, AHCCCS may also need to
take additional steps beyond its existing practice of requiring corrective action plans.
Similar to the OFR corrective action plans discussed in Finding 1 (see pages 9
through 15), AHCCCS should request additional documentation that demonstrates
that the health plan has implemented the actions described in its plan. In those cases
where the health plans’ performance has declined for consecutive years in spite of
their corrective action plans, or it is not possible to verify corrective action through
documentation, AHCCCS may need to conduct a site visit to ensure the plan was
ultimately implemented.
Recommendations
1. Because the clinical performance indicators provide valuable information about
the performance of individual health plans, and where applicable to OFR
standards, AHCCCS should incorporate the indicator results into its OFR report
and use the information when assessing performance.
2. As part of the process for improving performance when health plans do not meet
the contract specifications, AHCCCS should either request documentation or
conduct a site visit to ensure that the health plan has implemented the actions
described in its plan.
Office of the Auditor General
Agency Response
State of Arizona
ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
Committed to Excellence in Health Care
Jane Dee Hull
Governor
Phyllis Biedess
Director
801 East Jefferson • Phoenix, Arizona 85034-2246 • P.O. Box 25520 • Phoenix, Arizona 85002-5520 • (602) 417-4000
Internet: www.ahcccs.state.az.us
September 11, 2002
Debra Davenport, CPA
Auditor General
Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 85034
Re: Performance Audit, AHCCCS Processes for Monitoring the Quality of Care
Dear Ms. Davenport:
Thank you for the opportunity to review and comment on the Quality of Care performance
audit. Quality of Care is obviously one of the core functions at AHCCCS. It is critical to our
Medicaid system and the services that are provided to over 800,000 Arizonans. For that
reason, AHCCCS has spent years developing and refining four different tools that are used to
evaluate the Quality of Care provided within the AHCCCS system. AHCCCS is proud of the
system that has been developed and we appreciate the Auditor General acknowledging this
in the report which states;
“Additionally, a U.S. General Accounting Office report notes that AHCCCS requires its
health plans to provide data documenting the patient care provided to conduct various
patient outcome studies and also indicates that (Arizona’s AHCCCS program can serve as a
model for other Medicaid programs).”
That being said, there are no doubt some areas of improvement where the implementation of
Auditor General recommendations will continue to improve the program. However,
AHCCCS continues to believe that the Auditor General report over-emphasizes the need for
the agency to rely on the Operational and Financial Review (OFR) to serve as the ultimate
measure of Quality of Care. As stated above, the OFR is just one of four tools that AHCCCS
relies on to monitor Quality of Care in Arizona. The other tools that do provide critical
information include:
· Quality Management Plans
· Clinical Performance Indicators
· Quality of Care Complaints
It is also important to acknowledge at the outset of our comments that almost half of the
recommendations contained within the Auditor General report pertain to the
Developmentally Disabled program within the Department of Economic Security. This
program faces numerous challenges and fundamental change can occur only when both state
agencies work together.
Debra Davenport, CPA
September 11, 2002
Page Two
DES is a critical component and partner in addressing DDD recommendations identified by the
Auditor General.
Page 15 Recommendations:
Recommendation #1
AHCCCS should modify its annual operational and financial reviews of health plans to focus
more on evaluating health plan performance.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
However, AHCCCS will continue to rely on all four tools to evaluate the Quality of Care for our
members.
Recommendation #2
If AHCCCS increases its focus on health plan performance outcomes in its OFRs, which may
require increased resources, AHCCCS should prioritize and consider reducing the overall
number of OFR standards that it evaluates during each operational and financial review.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
Recommendation #3
AHCCCS should enhance its follow-up efforts to ensure that health plans resolve the problems
identified in the operational and financial reviews, including obtaining evidentiary
documentation and conducting more frequent follow-up visits when necessary to verify that
corrective actions have occurred.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented. It will however, have resource implications.
Page 21 Recommendations:
Recommendation #1
AHCCCS should ensure that complaints are appropriately resolved by obtaining evidence that
the member concern has been addressed and, when appropriate, changes have been
Debra Davenport, CPA
September 11, 2002
Page Three
implemented to help prevent similar problems from reoccurring. Where appropriate, AHCCCS
should contact the complainant to determine if the concern has been satisfactorily addressed.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
While AHCCCS believes much of this recommendation is being done, we will develop a policy
that will outline a process that includes, where appropriate, contacting the complainant to
determine if there has been satisfactory resolution. We will also, where appropriate, ensure that
changes have been implemented to help prevent reoccurrence of similar complaints. The
implementation of this policy may have a resource impact and require additional staff.
Recommendation #2
In those instances where AHCCCS has identified significant problems with a health plan’s
complaint-handling process, AHCCCS should:
a. Take appropriate action against the health plan for its failure to properly
investigate and resolve complaints, possibly including a formal notice to cure,
which would require corrective actions within a specified time period, or
financial sanctions.
b. Investigate and resolve the complaints it receives rather than refer them to
the health plan until the plan has implemented a complaint-handling system that
meets AHCCCS requirements.
c. Increase its monitoring of how the health plan handles the complaints they
receive directly until the plan has demonstrated its ability to adequately
investigate and resolve complaints.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
In regard to a. above, AHCCCS has utilized notice to cure and monetary sanctions against health
plans for these infractions. We will continue to utilize these actions to ensure timely and
complete resolution of complaint handling problems by our health plans.
Debra Davenport, CPA
September 11, 2002
Page Four
Page 27 Recommendations:
Recommendation #1
AHCCCS should continue to help DDD develop a centralized complaint-handling system that
meets standards.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
As AHCCCS has done for the last several years, we will continue to try and work closely with
DES to accomplish all recommendations regarding DDD.
Recommendation #2
AHCCCS should increase its monitoring of DDD complaints by reviewing files not only from
the central office, as it currently does, but also from the local offices to ensure that all types of
complaints are being handled appropriately.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
The implementation of the recommendation may require additional resources.
Recommendation #3
AHCCCS should review DDD’s home modification files as soon as possible to determine if
delays in providing home modification services are justified.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
As we did in 2000, AHCCCS has begun a forms review of DDD home modification files, and
have scheduled a comprehensive review of DDD’s home modification approval process. This
will take place in September 2002. We will increase our efforts at holding DDD to this standard
and apply sanctions as appropriate.
Debra Davenport, CPA
September 11, 2002
Page Five
Recommendation #4
If AHCCCS determines that DDD’s delays in providing home modification services are not
justified, AHCCCS should use its various options, such as another notice to cure or financial
sanctions, to see that DDD provides these services in a timely manner.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
Recommendation #5
AHCCCS should provide direction to DDD on which date the 90-day home modification
approval time frame begins and under what circumstances home modification requests may be
closed.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented. It should be noted that AHCCCS has both met with DES on several
occasions and provided written instructions with regard to the time frame issue.
Page 34 Recommendations:
Recommendation #1
Because the clinical performance indicators provide valuable information about the performance
of individual health plans, and where applicable to OFR standards, AHCCCS should incorporate
the indicator results into its OFR report and use the information when assessing performance.
Response: The finding of the Auditor General is agreed to and a different method of dealing
with the finding will be implemented.
The OFR is a snapshot in time that assesses the contracted health plan’s compliance with
financial, operational and contractual requirements. The Annual Quality Management Plan and
Evaluation, along with the required medical audits and studies, combined with the mandated
clinical performance indicators give an ongoing, trended, record of the plan’s outcomes as
related to the delivery of health care and health maintenance services. We feel these give a much
broader assessment of the health plan’s quality of health care delivery to our members. To
merge these all into the OFR process would create blurring of these important distinctions and
add significant operational burden to both AHCCCS and our contracted plans.
Debra Davenport, CPA
September 11, 2002
Page Six
We propose to continue our present process, but in order to implement this recommendation, we
will add to the OFR a review of all instances of substandard scores on clinical performance
indicators and any corrective action plans (as per recommendation #1 and #2 on page 15). These
will then be factored into the scoring of the OFR.
Recommendation #2
As part of the process for improving performance when health plans do not meet the contract
specifications, AHCCCS should either request documentation or conduct a site visit to ensure
that the health plan has implemented the actions described in its plan.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
We appreciate the efforts of the audit team.
Sincerely,
Phyllis Biedess
Director
ARIZONA DEPARTMENT OF ECONOMIC SECURITY
1717 West Jefferson • P.O. Box 6123 • Phoenix, Arizona 85005
Jane Dee Hull John L. Clayton
Governor Director
Debbie Davenport
Arizona Auditor General
2910 N. 44th St, Suite 410
Phoenix, AZ 85018
Dear Ms. Davenport:
Thank you for the opportunity to provide comments on the AHCCCS audit and DES
efforts to address quality of care concerns and home modifications for ALTCS members
who have developmental disabilities.
The following are our responses to the findings contained in the report. We have noted
each recommendation in italics, and listed our response following each finding.
I believe it is important to mention that this audit should be placed in the context of the
economics of the past 18 months. This has been a period of increasing financial and
resource constraints due to the contractions of the state budget. Indeed during this past
fiscal year, AHCCCS reduced its capitation rate by 5% to the Division. Additional
resources were planned for investment in both the quality management area (care
concerns) and the home modifications unit. These additional resources were not allocated
in order to constrain budgets, at a time when membership growth averaged 80 new
members per month and home modification requests increased 60%. Because we concur
with the importance of appropriately managing care concerns and ensuring the timeliness
of home modifications, we are assessing current resources for the possible redeployment
of staff from other functions to these activities.
We firmly believe that at no time were the ‘safety and care’ of any member or their
caregivers jeopardized due to the failure to meet either the 90 day or 150 day timeline.
Where life safety was the case, the Division acted with priority dispatch to complete the
home modification.
Sincerely,
John L. Clayton
AHCCCS’ and DES’ Efforts to Address Quality of Care Concerns
for Developmental Disabilities Members
Finding III recommendations:
1. AHCCCS should continue to help DDD develop a centralized complaint handling
system that meets standards.
The Department welcomes any additional assistance AHCCCS can provide in the
completion of this effort. Our current work plan commits to a retooling of our Phase
1 incident reporting system and the implementation of a web-based Phase 2-complaint
management system by January 2003. AHCCCS has been vigorously engaged in
monitoring our response to the 2001 Notice to Cure. We have, for the past year, met
in regularized meetings to discuss progress made and problems encountered. We have
kept them apprised of our efforts and they have been equally forthcoming with their
expectations.
2. AHCCCS should increase its monitoring of DDD complaints by reviewing files not
only from the central office, as it currently does, but also from the local offices to
ensure that all types of complaints are being handled appropriately.
The Department welcomes any additional assessment and recommendations
AHCCCS may have as a result of broader file reviews.
3. AHCCCS should review DDD’s home modification files as soon as possible to
determine if delays in providing home modification services are justified.
The Department welcomes any additional assessment and recommendations
AHCCCS may make after additional review of files. While we believe many of these
delays have their origins in satisfying member expectations and requirements within a
program with numerous policy and procedural constraints, the Division recognizes
that there have been some requests that have taken too long for approval. These have
resulted from limited resources and exploding growth in the use of and cost of the
program. An additional staff support was added recently to improve the processing of
requests. This cleared the calendar for the primary employee to complete home
studies. We are assessing the need for additional resource investments in this area.
4. If AHCCCS determines that DDD’s delays in providing home modification services
are not justified, AHCCCS should use its various options, such as another notice to
cure or financial sanctions, to see that DDD provides these services in a timely
manner.
The Department disagrees with the use of financial sanctions in an environment where
resource constraints and exploding growth are the likely source of delays. As you
correctly report, the last notice to cure was lifted 18 months ago when AHCCCS
determined that home modifications were being handled in a timely fashion. Since
then, the rate of requests has increased 60%, but the Division’s available resources for
this area have been frozen or reduced and the AHCCCS capitation rate has been
reduced. The resources required to meet a financial sanction would be far better
invested in an additional investment in staffing resources.
5. AHCCCS should provide direction to DDD on which date the 90 day home
modification approval time frame begins and under what circumstances home
modification requests may be closed.
These clarifying discussions have been initiated.
01-17 Arizona Board of Dispensing
Opticians
01-18 Arizona Department of
Corrections—Administrative
Services and Information
Technology
01-19 Arizona Department of
Education—Early Childhood
Block Grant
01-20 Department of Public Safety—
Highway Patrol
01-21 Board of Nursing
01-22 Department of Public Safety—
Criminal Investigations Division
01-23 Department of Building and
Fire Safety
01-24 Arizona Veterans’ Service
Advisory Commission
01-25 Department of Corrections—
Arizona Correctional Industries
01-26 Department of Corrections—
Sunset Factors
01-27 Board of Regents
01-28 Department of Public Safety—
Criminal Information Services
Bureau, Access Integrity Unit,
and Fingerprint Identification
Bureau
01-29 Department of Public Safety—
Sunset Factors
01-30 Family Builders Program
01-31 Perinatal Substance Abuse
Pilot Program
01-32 Homeless Youth Intervention
Program
01-33 Department of Health
Services—Behavioral Health
Services Reporting
Requirements
02-01 Arizona Works
02-02 Arizona State Lottery
Commission
02-03 Department of Economic
Security—Kinship Foster Care
and Kinship Care Pilot
Program
02-04 State Parks Board—
Heritage Fund
02-05 Arizona Health Care Cost
Containment System—
Member Services Division
02-06 Arizona Health Care Cost
Containment System—Rate
Setting Processes
02-07 Arizona Health Care Cost
Containment System—Medical
Services Contracting
Performance Audit Division reports issued within the last 12 months
Future Performance Audit Division reports
Arizona Health Care Cost Containment System—Sunset Factors
Department of Economic Security—Child Protective Services

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A REPORT
TO THE
ARIZONA LEGISLATURE
Debra K. Davenport
Auditor General
Arizona Health Care
Cost Containment
System
Quality of Care
Performance Audit Division
SEPTEMBER • 2002
REPORT NO. 02 – 08
Performance Audit
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five
senators and five representatives. Her mission is to provide independent and impartial information and specific
recommendations to improve the operations of state and local government entities. To this end, she provides financial
audits and accounting services to the State and political subdivisions, investigates possible misuse of public monies, and
conducts performance audits of school districts, state agencies, and the programs they administer.
The Joint Legislative Audit Committee
Representative Roberta L. Voss, Chair Senator Ken Bennett, Vice Chair
Representative Robert Blendu Senator Herb Guenther
Representative Gabrielle Giffords Senator Dean Martin
Representative Barbara Leff Senator Peter Rios
Representative James Sedillo Senator Tom Smith
Representative James Weiers (ex-officio) Senator Randall Gnant (ex-officio)
Audit Staff
Dale Chapman, Manager and Contact Person
Michele Diamond, Team leader Andrea Leder
Mary Edmonds
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
September 16, 2002
Members of the Arizona Legislature
The Honorable Jane Dee Hull, Governor
Ms. Phyllis Biedess, Director
Arizona Health Care Cost Containment System
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Arizona Health
Care Cost Containment System’s processes for monitoring the quality of care provided to its
members. This audit, part of a Sunset review of the agency, was conducted pursuant to an August 9,
2001, resolution of the Joint Legislative Audit Committee and under the authority vested in the
Auditor General by Arizona Revised Statutes (A.R.S.) §41-1279 and 41-2951 et seq. I am also
transmitting with this report a copy of the Report Highlights for this audit to provide a quick
summary for your convenience.
This is the fourth in a series of five reports to be issued on the Arizona Health Care Cost Containment
System.
As outlined in its response, AHCCCS agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on September 17, 2002.
Sincerely,
Debbie Davenport
Auditor General
Enclosure
Services:
The Office of Medical Management (OMM) performs
the following primary services to monitor quality of care:
1. Participates in the annual Operational and Financial
Reviews of AHCCCS health plans;
2. Monitors the investigation and resolution of quality-of-care
complaints that AHCCCS receives;
3. Develops and tracks performance indicators;
4. Tracks utilization of services;
5. Pre-authorizes high-cost services, such as transplants and
treatment for severe head injuries;
6. Oversees contracted pharmaceutical services; and
7. Establishes AHCCCS clinical policies.
Facilities and Equipment:
OMM performs its duties at the state-owned building
located at 701 East Jefferson Street, in Phoenix.
OMM owns standard equipment, such as computers,
printers, copy machines, and fax machines. It also has
one vehicle assigned to it.
Mission:
To establish and implement all clinical policies and
services to ensure comprehensive quality healthcare is
delivered to eligible Arizonans in a cost-effective
manner.
Arizona Health Care Cost Containment System
Office of Medical Management
Office of the Auditor General
FACT SHEET
OMM funding sources:
$3.9 million (fiscal year 2002)
OMM staffing:
60 FTE (fiscal year 2002)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$2.3 milion from federal sou1rces
$1.3 million from the State General Fund
$143,100 from state and federal sources to help
administer the Children's Health Insurance Program
$153,000 from Arizona Tobacco Litigation Fund monies
Clinical Services
Management
(24 FTE)
Clinical Quality
Management
(14 FTE)
Medical
Policy
(7 FTE)
Administration
(7 FTE)
Clinical
Research and
Data
(8 FTE)
State of Arizona
Office goals:
AHCCCS has established the following seven goals for the Office. AHCCCS established
the first two goals to report healthcare information annually to the Legislature, while the
remaining goals are internal to the Office.
1. To improve the health status for children.
2. To improve the health status of AHCCCS-enrolled women and senior citizens.
3. To continue refinement of OMM internal processes.
4. To improve internal visibility and coordination within AHCCCS.
5. To improve our partnership with contracted health plans by becoming a resource of
expertise and innovation in the clinical aspects of managed healthcare.
6. To increase the frequency and improve the effectiveness of OMM interaction with the
medical community.
7. To strengthen our quality management initiatives.
Adequacy of performance measures:
OMM has established 17 clinical performance indicators or performance measures that
track the quality of care provided to its members. As indicated in Finding 4 (see pages 29
through 34), AHCCCS collects and tracks data for these indicators, which include
measures that track the percentage of children with access to a primary care provider, the
percentage of 2-year-old children who have received immunizations, the percentage of
well-child visits, women receiving cervical and breast cancer screening, and the percentage
of nursing home residents who receive flu and pneumococcal immunizations.
However, AHCCCS has not established performance measures for OMM’s internal goals
and should consider doing so. Specifically, AHCCCS should consider establishing output,
efficiency, quality, and outcome measures. In fact, OMM collects, tracks, and analyzes the
data needed to support and report many of these suggested performance measures. For
example:
􀁺􇩁 AHCCCS could adopt output measures that would report the number of medical policies revised
or implemented, or the number of health plan requests for assistance fulfilled.
􀁺􇩁 AHCCCS could adopt quality measures that would emphasize OMM’s reliability or
responsiveness to the customer or stakeholder, such as health plan satisfaction with medical
policies and OMM assistance in interpreting medical policies.
􀁺􇩁 AHCCCS could also adopt efficiency measures that would reflect the cost or timeliness of services
provided by OMM. These measures might track how timely OMM responds to health plan or
internal requests for assistance, or whether complaints OMM receives are resolved in a timely
manner.
The Office of the Auditor General has conducted a performance audit of the Arizona
Health Care Cost Containment System’s (AHCCCS) processes for monitoring the
quality of care provided to participants in the State’s major healthcare program.
AHCCCS administers Arizona’s Medicaid program and is also the healthcare
program for low-income Arizonans who do not qualify for Medicaid. This audit, part of
a Sunset review of the agency, was conducted pursuant to an August 9, 2001,
resolution of the Joint Legislative Audit Committee and under the authority vested in
the Auditor General by Arizona Revised Statutes (A.R.S.) §§41-1279 and 41-2951 et
seq. It is the fourth in a series of five audits of AHCCCS. Other audits in the series
cover the Division of Member Services, AHCCCS’ rate-setting processes, AHCCCS’
medical services contracting practices, and an evaluation of the agency using the
criteria in Arizona’s sunset law.
Monitoring the quality of care and services provided within a managed care system
is important to ensure that members receive needed services. A U.S. General
Accounting Office report found that managed care can create an incentive to under-serve
or even deny beneficiaries access to needed care, since plans can profit from
not delivering services.1 Another study has found that monitoring quality of care may
be especially important for programs serving the Medicaid population because they
contain many disadvantaged and vulnerable individuals.2 Because of this
importance, monitoring the quality of care is one of AHCCCS’ primary functions.
AHCCCS uses four main tools for monitoring quality of care:
􀁺􇩏 Operational and Financial Reviews—These annual onsite reviews assess health
plans’ compliance with AHCCCS standards and contract requirements in
several categories, including quality of care. These reviews are one of AHCCCS’
primary ways to ensure that plans provide high-quality, accessible health
services.
􀁺􇩑 Quality-of-Care Complaints—These complaints typically involve concerns with
the medical care members have received and can be used to identify systemic
problems and make improvements.
page i
1 U.S. General Accounting Office, Medicaid Managed Care: Challenge of Holding Plans Accountable Requires Greater State
Effort, May 1997. (GAO/HEHS-97-86).
2 Hadley, James P. and Wolf, Linda F. “Monitoring and Evaluating the Delivery of Services Under Managed Care.” Health
Care Financing Review, Washington, Summer 1996.
Office of the Auditor General
SUMMARY
page ii
State of Arizona
􀁺􇩃 Clinical performance indicators—AHCCCS has established 17 clinical
performance indicators to determine how well the overall healthcare system is
delivering services, such as cancer screening or immunizations, for specific
populations within its membership.
􀁺􇩑 Quality management plans—AHCCCS annually reviews each health plan’s
quality management plan to assess the systems they have established to
monitor and improve quality of care. The quality management plan includes an
evaluation of the plan’s quality management programs and documents health
plan policies and procedures for conducting quality management activities.
In addition to establishing these and other mechanisms to monitor the quality of care,
AHCCCS has been recognized for its performance. According to a Nelson A.
Rockefeller Institute of Government study, which assessed Medicaid managed care
in five states, Arizona “has perhaps the longest running, best-established managed
care program in the country…(AHCCCS) has been extensively evaluated and has
received uniformly high marks both for management and program outcomes.”1
Additionally, a U.S. General Accounting Office report notes that AHCCCS requires its
health plans to provide data documenting the patient care provided and to conduct
various patient outcome studies and also indicates that “Arizona’s AHCCCS program
can serve as a model for other Medicaid programs.”2
AHCCCS should strengthen its health plan reviews (see
pages 9 through 15)
AHCCCS can strengthen its annual operational and financial reviews (OFR) by
focusing more heavily on plans’ actual performance in providing quality care. Auditors
found that reviews were primarily evaluating whether plans had policies or processes
in place, rather than whether the policies or processes produced acceptable results.
For example, AHCCCS requires its health plans to provide medically necessary
transportation in a timely manner. AHCCCS members are provided with both
emergency and non-emergency transportation if needed. AHCCCS reviews whether
a health plan has a system in place to monitor wait times. However, it does not review
what the actual transportation wait times were, or whether the transportation was
provided on a timely basis. To conduct the additional work needed to assess
performance outcomes, AHCCCS may need to reduce or prioritize the various
standards it evaluates, as it currently evaluates up to 111 standards during some
reviews.
1 James W. Fossett and Associates, Malcolm Goggin, John S. Hall, Jocelyn Johnston, Christopher Plein, Richard Roper,
and Carol Weissert, Managing Accountability in Medicaid Managed Care: The Politics of Public Management, The Nelson
A. Rockefeller Institute of Government, Albany, New York, 1999.
2 U. S. General Accounting Office, Arizona Medicaid:Competition Among Managed Care Plans Lowers Program Costs,
October 1995. (GAO/HEHS-96-2).
page iii
Office of the Auditor General
Furthermore, limited followup on identified problems has allowed some problems to
continue. When auditors compared recommendations from reviews conducted in
1999 with reviews conducted 2 years later, they found that problems continued, even
though health plans submitted corrective action plans as AHCCCS required.
AHCCCS expects its reviews to act as a check on how thoroughly plans adopt
needed changes, but auditors found that subsequent reviews did not always cover
all the areas in which problems had been identified. These problems point to a need
to strengthen follow-up efforts by verifying that corrective actions have occurred,
either through a review of applicable documentation or a follow-up visit.
AHCCCS needs to ensure member complaints are
appropriately resolved (see pages 17 through 21)
AHCCCS needs to ensure that all quality-of-care complaints are appropriately
resolved. Currently, AHCCCS refers the complaints it receives to its health plans for
investigation and resolution. When auditors reviewed a sample of such complaints,
they found that, for nearly half of the complaints requiring corrective action, the files
contained no indication that any corrective action had been taken. AHCCCS needs
to take additional steps to ensure that the complaints it refers to health plans are
appropriately resolved.
These problems are exacerbated because AHCCCS continues to refer complaints to
health plans with deficient complaint-handling practices. In its federal fiscal year 2000
and 2001 operational and financial reviews, AHCCCS identified four health plans with
inadequate complaint processes. AHCCCS referred at least 83 complaints to these
four health plans for investigation and resolution after it identified the deficiencies and
before it accepted the health plans’ corrective actions. When it identifies deficient
complaint-handling practices, AHCCCS should take the appropriate action against
the health plan to ensure the deficient practices are addressed. Until corrective action
is taken, AHCCCS should investigate and resolve those complaints it receives rather
than referring these matters to the health plan. AHCCCS should also increase its
monitoring of how these health plans handle the complaints they receive directly.
AHCCCS needs to do more to address concerns with
care for the developmentally disabled (see pages 23
through 27)
AHCCCS needs to do more to ensure that quality-of-care concerns for its ALTCS
developmentally disabled members are addressed. Statute currently requires
AHCCCS to contract with the Department of Economic Security’s Division of
Developmental Disabilities (DDD) to provide services to the State’s developmentally
disabled population. However, AHCCCS has two long-standing concerns with DDD’s
provision of services to its members. One is complaint handling, an area in which
DDD has not met standards since 1996. For example, DDD had not met AHCCCS
requirements to develop a comprehensive, centralized complaint system to track all
member problems and complaints. Additionally, in its 2001 OFR of DDD, AHCCCS
identified problems with DDD’s complaint handling, specifically noting that some
complaints lacked evidence of adequate research and documentation. In response
to AHCCCS’ concerns and requirements, DDD has implemented a complaint-processing
system to capture complaint data statewide. However, while this system
currently captures complaint data on the most severe, high-risk incidents, it does not
yet capture all complaint data. DDD plans on adding other incidents to this system in
the future and is working with AHCCCS to ensure the remainder of the system
development meets AHCCCS requirements. As a result, AHCCCS should continue
working with DDD to implement a complaint-tracking system that meets standards
and expand its review of DDD’s complaint handling.
The second area of concern is the provision of home modification services, such as
wheelchair ramps. AHCCCS has not ensured that DDD has provided services on a
timely basis, hindering members’ ability to function independently in the community.
Auditors found continuing evidence of delays, with DDD failing to meet deadlines for
nearly two-thirds of the 85 modifications reported as approved between January and
May 2002. Although AHCCCS took action in 2000 to address the delays in providing
these services, it has taken limited action to address the current delays. Therefore,
AHCCCS should determine the reasons for these continuing delays as soon as
possible, and if necessary, use its various options such as a notice to cure or financial
sanctions to ensure these services are provided in a timely manner.
Clinical performance indicators provide useful information
(see pages 29 through 34)
AHCCCS uses clinical performance indicators to track how well the system is
delivering services such as immunizations, cancer screenings, and well-child
checkups. These indicators serve several purposes, including assessing health plan
performance and moving the AHCCCS population toward national health goals. For
example, for the most recent 3 years in which data are available, AHCCCS health
plans have continued to improve in the areas of immunizations in 2-year-olds, annual
dental visits for children, and adolescent well-care visits. In contrast, health plans’
performance on children’s access to primary care and influenza immunizations in
nursing facilities has declined.
page iv
State of Arizona
While such indicators are useful, minor changes could enhance their impact.
Because the indicators provide valuable information about how well health plans are
delivering services, AHCCCS should use the indicator results as part of its annual
reviews when assessing health plan performance. In addition, AHCCCS should
expand its followup for health plans that do not meet the established indicator
standards beyond requiring and reviewing corrective action plans. AHCCCS should
request additional documentation that demonstrates that the health plan has
implemented corrective actions and in some cases, conduct site visits to ensure that
actions were implemented.
pagev
Office of the Auditor General
page vi
State of Arizona
page vii
Office of the Auditor General
TABLE OF CONTENTS
continued
Introduction & Background
Finding 1: AHCCCS should strengthen its health plan
reviews
Annual reviews used to monitor quality of care
Reviews can better monitor quality
AHCCCS should strengthen monitoring
Recommendations
Finding 2: AHCCCS needs to ensure member
complaints are appropriately resolved
Complaints identify member concerns
Complaint resolution inconsistently occurs
AHCCCS should address deficient complaint handling
Recommendations
Finding 3: AHCCCS needs to do more to address
concerns with care for the developmentally disabled
DDD serves the developmentally disabled
Complaint-handling concerns continue
Home modifications remain untimely
Recommendations
1
9
9
10
14
15
17
17
18
19
21
23
23
24
25
27
page viii
State of Arizona
Finding 4: Clinical performance indicators provide
useful information
Indicators help monitor progress
AHCCCS periodically reviews indicators
Minor changes could enhance impact
Recommendations
Agency response
Tables:
1 Enrollment and counties served by health plans as of July 2002
2 Office of Medical Management schedule of revenues and
expenditures years ended June 30, 2000, 2001, and 2002 (in
thousands—unaudited)
3 Operational and financial review standards; federal year ended
September 30, 2001
4 Clinical performance indicators required by AHCCCS’ federal fiscal
year 2002 contracts
5 Statewide clinical performance indicator results federal years
ended September 30, 1998 through 2000
TABLE OF CONTENTS
29
29
32
33
34
2
5
11
31
32
concluded
page1
Arizona was the first
state to implement a
managed care system.
Office of the Auditor General
INTRODUCTION
& BACKGROUND
The Office of the Auditor General has conducted a performance audit of the Arizona
Health Care Cost Containment System’s (AHCCCS) methods to monitor quality of
care. This audit, part of a Sunset review of the agency, was conducted pursuant to an
August 9, 2001, resolution of the Joint Legislative Audit Committee and under the
authority vested in the Auditor General by Arizona Revised Statutes (A.R.S) §§41-1279
and 41-2951 et seq. This is the fourth in a series of five audits of AHCCCS. The first
two audits covered the Division of Member Services and AHCCCS’ rate-setting
processes. The remaining two audits in this series will cover AHCCCS’ medical
services contracting practices and provide information on the agency using the
criteria in Arizona’s sunset law.
Overview of AHCCCS’ managed care system
AHCCCS administers Arizona’s managed care Medicaid program and the State’s
healthcare program for low-income Arizonans who do not qualify for Medicaid. While
Arizona became the last state to implement a Medicaid program, it was the first state
to have a managed care Medicaid program. AHCCCS began in 1982 by offering
acute care such as physician services, hospitalization, pharmacy, and laboratory
benefits to its members, and began adding long-term care services such as nursing
facility care and home- and community-based services in 1988. AHCCCS contracts
with health plans to provide medical services for its members. These health plans
then obtain services for AHCCCS members from physicians, hospitals, laboratories,
and other healthcare providers. AHCCCS pays the health plans a fixed amount in
advance each month, called a capitation payment, for each enrolled member,
regardless of the number or level of services provided. From these capitation
payments, the health plans pay the providers for covered services provided to
AHCCCS members. AHCCCS currently contracts with nine plans to provide acute
care services in various locations throughout the State and eight other plans to
provide long-term care (see Table 1, page 2).
Monitoring quality of care an important function
Monitoring the quality of care and services provided within a managed care system
is one of the most critical functions that state Medicaid agencies can perform, as it
helps ensure that members receive needed services. According to the U.S. General
Accounting Office, managed care can create an incentive to under-serve or even
deny beneficiaries access to needed care since plans can profit from not delivering
services.1 According to the Health Care Financing Review, quality monitoring is “…
perhaps one of the most important activities to pursue as the number of beneficiaries
in managed care systems increases…with the economic incentives inherent in
managed care systems, there is the potential for access and quality of care to be
adversely affected. Considering that a significant number of disadvantaged and
vulnerable individuals make up the Medicaid population, the need for effective
monitoring and evaluation of the access and quality of care provided to this
population is particularly apparent.”2 AHCCCS relies primarily on its Office of Medical
page2
AHCCCS conducts an
annual onsite review of
all health plans.
1 U.S. General Accounting Office. Medicaid Managed Care: Challenge of Holding Plans Accountable Requires Greater State
Effort, May 1997. (GAO/HEHS-97-86)
2 Hadley, James P. and Linda F. Wolf. “Monitoring and Evaluating the Delivery of Services Under Managed Care.” Health
Care Financing Review, Washington, Summer 1996.
State of Arizona
Table Enrollment and Counties Served by Health Plans
As of Health Plan Enrollment Counties Served
Acute Care
Arizona Physicians IPA 215,617 All but Gila and Pinal
Mercy Care Plan 172,463 All but Apache, La Paz, Mojave, Navajo
Phoenix Health Plan/Community Connection 65,707 Gila, Maricopa, and Pinal
CIGNA Community Choice 60,540 Maricopa
Health Choice Arizona 57,336 Maricopa, Pima
Maricopa Managed Care 39,545 Maricopa
University Family Care 20,776 Pima
Pima Health Plan 13,922 Pima
Family Health Plan of North
Eastern Arizona (NEAZ)
12,642
Apache, La Paz, Mohave, and Navajo
Total 1 658,548
Long-Term Care
Department of Economic Security—Division of
Developmental Disabilities
13,402
All
Maricopa Long Term Care 7,635 Maricopa
Pima Long Term Care 3,507 Pima, Santa Cruz
Evercare Select 2,952 Apache, Coconino, La Paz, Maricopa,
Mohave, Navajo, Yuma
Mercy Care Plan 2,828 Maricopa
Yavapai County Long Term Care 1,043 Yavapai
Pinal/Gila Long Term Care 1,005 Gila, Pinal
Cochise Health Systems 850 Cochise, Graham, Greenlee
Total 2 33,222
1 Excludes 5,401 members served by Department of Economic Security Comprehensive Medical and Dental program and the 88,994 members
served by the Indian Health Services and Arizona Health Care Cost Containment System (AHCCCS), fee-for-service.
2 Excludes the 1,440 Native Americans served by tribal contractors.
Source: Auditor General staff summary of information on AHCCCS Web site, July 2002.
Table 1 Enrollment and Counties Served by Health Plans
As of July 2002
Management (OMM) to ensure quality of care for its members. As a result, OMM is
generally responsible for evaluating health plan practices for improving quality and
monitoring the care members received.1 AHCCCS uses four primary mechanisms to
accomplish this.
􀁺􇨠 Operational and financial reviews—AHCCCS conducts annual onsite
Operational and Financial Reviews (OFR) of 17 acute and ALTCS health plans to
assess compliance with AHCCCS standards and contract requirements in
several categories: quality of care, grievance and appeals, delivery of services,
and financial management.2 While OMM participates in these reviews, AHCCCS’
Office of Managed Care coordinates the OFR and is also responsible for
reviewing many of the standards. (See Auditor General Report No. 02-XX for
more information about the Office of Managed Care.) Through the OFR,
AHCCCS attempts to maintain a comprehensive understanding of health plan
activities, ensure service delivery and, in the event of deficiencies, provide
technical assistance to resolve the problem and ensure that it will not reoccur.
􀁺􇩑 Quality-of-care complaints—AHCCCS also monitors the care members receive
through quality-of-care complaints. Quality-of-care complaints typically involve
concerns with the medical care members have received, such as substandard
nursing care or difficulty in obtaining medications and services, and can be used
to identify systemic problems and make improvements. Members can send their
complaints to their provider, their health plan, or directly to AHCCCS.
􀁺􇨠 Clinical performance indicators—AHCCCS has established 17 clinical
performance indicators to determine how well the overall healthcare system is
delivering services for specific populations within its membership. For example,
AHCCCS tracks the percentage of its elderly population who receive flu shots
and the percentage of pregnant women receiving prenatal care. By tracking this
information AHCCCS can determine if its population is meeting state and
national healthcare benchmarks. Also, AHCCCS can identify poor performance
for specific indicators and require corrective actions to improve performance at
individual health plans or across several health plans. AHCCCS has established
performance standards for each of these indicators and has incorporated them
into the acute care health plans’ contracts. For a complete list of the clinical
performance indicators, see Table 4, page 31.
􀁺􇩑 Quality management plans—AHCCCS annually reviews each health plan’s
quality management plans to assess the systems the health plans have
established to monitor and improve quality of care. The quality management
plan includes an annual evaluation health plans conduct to measure the
effectiveness of their quality management programs. This evaluation
page3
1 OMM also tracks the utilization of services, preauthorizes high-cost services such as transplants and treatment for severe
head injuries, and oversees contract pharmaceutical services.
2 While AHCCCS contracts with 18 health plans, it does not conduct OFRs of the Department of Economic Security’s
Comprehensive Medical and Dental Program.
Office of the Auditor General
summarizes quality management activities performed throughout the year,
trends identified as a result of these activities, and action taken for improvement.
The quality management plan also includes written measurable objectives the
health plans have developed to improve their quality management programs.
Further, the quality management plan documents various health plan policies
and procedures that address quality management activities, such as complaint
tracking and trending and coordination of member care.
AHCCCS also conducts a number of other activities to monitor quality of care.
Specifically, AHCCCS conducts periodic member and provider satisfaction surveys to
obtain feedback on its healthcare system and members’ assessments of their treatment
for various illnesses, such as diabetes and asthma, to determine the impact of efforts to
improve the care members receive.
OMM staffing and budget
For fiscal year 2002, OMM was authorized 60 FTE and allocated over $3.9 million in
total funding. As illustrated in Table 2 (see page 5), of this amount, approximately $1.3
million was from the General Fund and over $2.3 million came from Title XIX federal
matching funds. The remainder came from the Children’s Health Insurance Program
Fund and the Arizona Tobacco Litigation Fund.
Audit scope and methodology
This audit focused on AHCCCS’ methods to monitor the quality of care provided to
its members. Specifically, auditors reviewed AHCCCS’ Operational and Financial
Review process, its quality-of-care complaint-handling process, its efforts to address
concerns with its DDD long-term care contract, and the clinical performance
indicators AHCCCS has established and tracks.
This report contains findings and recommendations in four areas, as follows:
􀁺􇩁 AHCCCS should increase the impact of its Operational and Financial Reviews
by focusing on health plan performance outcomes, in addition to its review of
plan policies and procedures.
􀁺􇩁 AHCCCS needs to ensure that the quality-of-care complaints it receives are
appropriately resolved.
page4
State of Arizona
􀁺􇩁 AHCCCS needs to do more to ensure that complaints from its ALTCS
developmentally disabled clients are appropriately handled and that home
modification services are provided to this population in a timely manner.
􀁺􇩗 While AHCCCS has established and tracks the performance of 17 clinical
performance indicators that reflect the services provided and the general health
of its member population, minor adjustments to these indicators could enhance
their impact.
Auditors used a number of research methods to study the issues addressed in this
report, including interviewing AHCCCS staff, reviewing the AHCCCS 2000 member
satisfaction survey design and results, conducting a literature review, and attending
two AHCCCS quarterly meetings with acute health plans and two quarterly meetings
page5
Office of the Auditor General
Table 2 Office of Medical Management
Schedule of Revenues and Expenditures
Years Ended June 30, 2000, 2001, and 2002
(in Thousands—Unaudited)
2000 2001 2002
Revenues:
Appropriations:
State General Fund $1,209.1 $1,302.8 $1,286.3
Children’s Health Insurance Program Fund 1 71.1 131.9 143.1
Federal 1,878.9 2,049.4 2,353.4
Tobacco settlement litigation monies 2 4.1 153.0
Total revenues $3,159.1 $3,488.2 $3,935.8
Expenditures:
Personal services $1,782.6 $2,089.6 $2,535.7
Employee-related 349.1 412.2 507.9
Professional and outside services 892.5 837.7 728.3
Travel, in-state 11.6 10.6 15.0
Travel, out-of-state 5.5 7.9 6.0
Other operating 108.6 123.4 139.8
Equipment 9.2 6.8 3.1
Total expenditures $3,159.1 $3,488.2 $3,935.8
1 Consists of monies allocated to the Division for its role in administering the children’s health insurance program. Monies are appropriated
from the Children’s Health Insurance Program Fund and consist of tobacco taxes and federal matching monies for providing health
insurance coverage to uninsured children whose families meet certain income requirements.
2 Consists of the portion of monies obtained from a settlement with the tobacco companies allocated to the Division and used for its role in
administering the Proposition 204 program.
Source: Auditor General staff analysis of financial information provided by the Arizona Health Care Cost Containment System for the years
ended June 30, 2000, 2001, and 2002.
Table 2 Office of Medical Management
Schedule of Revenues and Expenditures
Years Ended June 30, 2000, 2001, and 2002
(in Thousands—Unaudited)
page6
State of Arizona
1 If a health plan does not comply with its contract, AHCCCS may issue a notice to cure, which alerts the health plan of the
deficiency, describes what the health plan must do to be in compliance, and provides a deadline for completing these
tasks.
with ALTCS health plans, during which quality improvement issues were reviewed.
Auditors also reviewed statutes, rules, and policies and procedures. In addition,
auditors used the following methods:
􀁺􇩔 To assess the Operational and Financial Review as a tool to ensure quality,
auditors analyzed a subset of OFR standards selected to reflect those areas
members were most likely to view as important aspects of health service quality
based on an auditor review of literature and AHCCCS member surveys. This
subset was reviewed and amended with input from AHCCCS management. The
subset included 28 of 111 acute standards evaluated in 2001, 16 of 31 ALTCS
standards evaluated in 2001, and 18 of 43 ALTCS standards evaluated in 2000.
Auditors reviewed AHCCCS findings and recommendations regarding health
plans’ performance on these standards and assessed AHCCCS’ evaluation
methods by reviewing the 2001 or 2000 OFR for 17 health plans. For 4 health
plans, auditors also reviewed AHCCCS OFR working papers. Further, auditors
reviewed the 1999 OFR recommendations made for 7 health plans and
compared these recommendations to 2001 OFR results. Finally, auditors
observed AHCCCS employees conducting the quality management and delivery
systems portion of an OFR for an acute health plan and interviewed staff at two
other large health plans.
􀁺􇨠 To assess whether AHCCCS handles quality-of-care complaints appropriately,
auditors reviewed a sample of 40 quality-of-care complaints AHCCCS received
in federal fiscal year 2001, involving two acute and two ALTCS health plans.
Auditors also reviewed the health plans’ files for these 40 complaints, and the
quality complaint investigation and resolution policies and procedures for the
four health plans in the sample, and interviewed these health plans’ staffs on their
complaint-handling processes.
􀁺􇨠 To assess AHCCCS’ ability to ensure the quality of care provided to its
developmentally disabled members, auditors reviewed the two notices to cure
regarding AHCCCS concerns with the Arizona Department of Economic Security
Division of Developmental Disabilities (DDD) complaint-handling system and
provision of home modification services.1 Auditors attended the April and May
2002 meetings held by AHCCCS and DDD to discuss progress on the
complaint-handling notice to cure and reviewed the minutes from the 20
previous meetings that took place between March 2001 and March 2002.
Further, auditors reviewed the 5 DDD-prepared monthly home modification
tracking reports from January 2002 to May 2002 and 12 DDD home modification
files selected from the January 2002 to April 2002 reports. Further, auditors
page7
Office of the Auditor General
reviewed the 6 DDD OFRs conducted between 1996 and 2001; interviewed DDD
central office and District 1 staff; and reviewed 10 complaints one District 1 local
office received during federal fiscal year 2002.
􀁺􇩔 To assess the clinical performance indicators, auditors reviewed AHCCCS
clinical performance indicator reports from 1998 through 2002; reviewed
corrective action plans from four health plans that did not meet AHCCCS
contract standards; reviewed the 2002 Health Plan Employer Data and
Information Set standards; and researched state and federal health benchmark
standards, including those of the Arizona Department of Health Services.
This audit was conducted in accordance with government auditing standards.
The Auditor General and staff express appreciation to the director and staff of the
Arizona Health Care Cost Containment System, the Office of Medical Management,
and the Office of Managed Care for their cooperation and assistance throughout this
audit.
page8
State of Arizona
page9
Office of the Auditor General
FINDING 1
AHCCCS should strengthen its health plan
reviews
AHCCCS’ annual onsite reviews can be strengthened by increasing the focus of
these reviews on health plan performance outcomes in providing quality care. These
reviews are one of AHCCCS’ key evaluation tools for ensuring that health plans
provide high-quality, accessible health services. However, because these reviews
primarily focus on whether plans have a policy or process in place, rather than on
what the process accomplishes, problems in service delivery may be overlooked.
Additionally, AHCCCS’ followup on identified problems is limited, allowing some
problems to continue. To increase the value of its reviews, AHCCCS should increase
its focus on health plan performance outcomes and strengthen its efforts to ensure
that health plans have corrected deficiencies.
Annual reviews used to monitor quality of care
AHCCCS has established a comprehensive evaluation mechanism, called an
Operational and Financial Review (OFR), to annually review its health plans’
operations. In its state Medicaid Plan, AHCCCS identifies the OFR as a key
mechanism to ensure the quality and effective delivery of health services through its
health plans. These reviews assess the health plan’s compliance with contractual and
AHCCCS requirements as well as the quality and availability of health services. The
OFR’s important components include:
􀁺􇨠 Assessment by a qualified team—AHCCCS assembles highly qualified teams,
typically comprising 10 to 20 AHCCCS personnel, including doctors, nurses, and
accountants, and other analysts who will spend up to 1 week onsite at the health
plan conducting the review. Typical review activities include interviews, observing
processes, policy and procedure reviews, and some file reviews.
An OFR evaluates the
quality of services
provided to members.
􀁺􇩁 Assessments of compliance with numerous standards—For each of its reviews,
AHCCCS evaluates health plan compliance with numerous standards.
Specifically, for the year ending September 30, 2001, AHCCCS evaluated each
acute health care plan on 111 different standards grouped into 9 categories,
while it reviewed four ALTCS health plans on 31 standards grouped into 6
categories. Table 3 (see page 11), provides further information on these review
categories and examples of standards. During the 5-year contract period (1-year
contract with four 1-year renewal options), AHCCCS will conduct both full and
targeted annual reviews. For full reviews, which normally occur during the first
and last year of the contract, AHCCCS reviews all of the standards for each of
its health plans. For targeted reviews, AHCCCS focuses on review categories or
standards of particular current importance, or those that tend to be problematic
for individual health plans.
􀁺􇩁 Action plans when problems are reported—Following the onsite review,
AHCCCS prepares an individual report of its findings and recommendations for
each health plan. For each standard reviewed, AHCCCS determines a score of
full, substantial, partial, or noncompliance and reports it along with any
recommendations for improvement. In most cases, when it makes
recommendations for improvement, AHCCCS requires the health plan to submit
a corrective action plan detailing how it will address the problems identified.
Additionally, AHCCCS sends the complete report to each health plan, while
executive summaries are sent to the U.S. Department of Health and Human
Services, Centers for Medicare and Medicaid Services.
Reviews can better monitor quality
Although AHCCCS has established a comprehensive set of standards, its
assessment methods often focus on ensuring that a policy or process is in place, and
not on how effectively the health plan is providing services or whether the process is
being implemented effectively. To better assess whether members receive the care
and services that health plans are required to provide, AHCCCS should place more
emphasis on performance. To free up staff time for such assessments, AHCCCS may
need to narrow its current set of standards, placing priority on those standards that
matter most for health plan performance and quality of care.
AHCCCS often evaluates policy rather than performance—Auditors
analyzed 28 acute and 16 ALTCS quality-of-care standards and found that for
approximately 40 percent of the standards, AHCCCS’ evaluation was based on
whether the health plan had a process or policy in place, not on whether the desired
outcome was achieved.1 This emphasis on policy and procedure may cause
AHCCCS to miss problems that exist within the system. For example:
page10
State of Arizona
Reviews do not always
assess plan
performance.
1 See Audit Scope and Methodology (pages 4 through 7), for auditors’ methods to select standards.
page11
Office of the Auditor General
􀁺􇩗 Wait times for medically necessary transportation—This standard evaluates
whether health plans provide members with medically necessary transportation
in a timely manner. Sixteen of the 17 health plans received ratings of at least
substantial compliance for this standard because they had a system to monitor
3 Operational and Financial Review Federal Year Ended September 30, 2001
Category
Number
of Standards
Examples
Standards for Acute Care Health Plans
Delivery System 17 Meets minimum network standards for
primary care physicians
Member Services 13 Has adequate number of customer service
representatives to answer telephone
calls promptly
Quality Management 18 Resolves quality-of-care complaints within
established time frame
Maternal/Child Health 9 Ensures members receive timely prenatal
care
Member Rights and Responsibilities 6 Explains service denial reasons in common
language
Grievances and Appeals 9 Has provider manual that contains grievance
process
Utilization Management 21 Makes prior authorization decisions in a timely
manner
Financial Management 13 Meets required financial viability criteria
Health Service Reporting 5 Has policies and procedures addressing
encounter data submission
Standards for Long-Term Care Health Plans
Delivery System 4 Meets service area minimum network
standards for attendant care workers
Member Services and Case
Management
2
Ensures case managers have appropriate
qualifications and meet caseload
standards
Quality Management 3 Aggregates and analyzes member quality- of-care
and complaint data and uses the
results to improve care
Behavioral Health 4 Ensures contractors train case managers and
providers to screen for behavioral health
needs
Administration and Management 8 Appropriately notifies members when services
are denied, terminated, reduced, or
suspended
Financial Management 10 Has adequate procedures for timely and
accurate claims payment or denial
Source: Auditor General staff summary of Arizona Health Care Cost Containment System’s 2001 operational and financial
reviews of health plans.
Table 3 Operational and Financial Review Standards
Federal Year Ended September 30, 2001
page12
State of Arizona
Timeliness of response
to member calls is not
reported.
wait times. However, none of the 17 OFRs included information regarding the
actual transportation wait times, or whether the transportation was provided on a
timely basis. At the same time, member complaint records or satisfaction
surveys indicated that transportation wait times were a source of member
dissatisfaction for six of nine acute health plans.
􀁺􇩍 Members receiving prenatal care—This standard evaluates whether “the health
plan ensures that pregnant members obtain initial prenatal care appointments
within prescribed time frames…” However, data on the percentage of women
receiving prenatal care within prescribed time frames is not considered for
AHCCCS health plan compliance scores, even through AHCCCS collects and
reports this information for a clinical performance indicator. Instead, health plans
are evaluated on whether they have established goals, interventions, and other
procedures to monitor and increase the number of members receiving prenatal
care. Eight of nine acute health plans received ratings of full or substantial
compliance for this standard.
􀁺􇨠 Timely response to member calls—This standard evaluates whether the health
plan has a sufficient number of member service representatives to promptly
handle member telephone calls. Each health plan sets its own standards for call
wait times. AHCCCS assesses this standard by whether: 1) the plan has
established standards for wait times and abandonment rates, 2) the plan
monitors hold times and abandonment rates, and 3) the plan takes action when
standards are not met. Because AHCCCS assesses the health plan’s system to
handle member calls, health plans can receive ratings of full or substantial
compliance regardless of whether calls are answered according to plan
standards. Seven of the nine acute health plans received ratings of full or
substantial compliance for this standard.
In 1997, the U.S General Accounting Office evaluated the mechanisms used to
monitor the adequacy and accessibility of healthcare services in four managed care
states.1 While GAO acknowledged the difficulty in assessing quality of care in
managed care systems, it found fault with current compliance standards used in
these managed care organizations to assess quality of care. Specifically, it found that
plan compliance with contract requirements does not necessarily ensure that
beneficiaries receive the care they need.
OFR evaluation methods should emphasize performance—AHCCCS
should place more emphasis on performance when evaluating health plans, which it
can do by revising its assessment methods to more often focus on health plan
performance outcomes and member quality of care. AHCCCS management has
indicated that it agrees with the change in emphasis and, during the course of this
audit, changed its assessment methods for several important service quality
1 U.S. General Accounting Office. Medicaid Managed Care: Challenge of Holding Plans Accountable Requires Greater State
Effort, May 1997. (GAO/HEHS-97-86). The four states reviewed were Arizona, Pennsylvania, Tennessee, and Wisconsin.
page13
Office of the Auditor General
standards for its 2002 reviews. For example, in February 2002, AHCCCS began to
evaluate health plan data to determine if AHCCCS standards for transportation wait
times are met, in addition to determining whether plans have a system in place to
monitor wait times.
Standards may need to be prioritized—Since assessing performance
outcomes may require increased AHCCCS resources, AHCCCS may need to
prioritize and/or reduce the current number of standards it measures. Generally,
AHCCCS reviews 17 health plans annually and assesses compliance with up to 111
standards for its acute plans and 31 standards for its ALTCS plans. According to
AHCCCS officials, it has adequate staff to conduct these reviews. However, a change
to a more performance-oriented review could require more in-depth work and
analysis and potentially more resources. Therefore, AHCCCS may want a limited set
of core OFR standards, measured across all health plans, with the remainder of the
review focusing on health plan-specific or system-wide areas of concern. Auditors’
review identified a number of sources AHCCCS can consider to identify focus areas
for the OFR each year.
􀁺􇨠 Member complaints—Both the health plans and AHCCCS compile data on the
number and nature of member complaints. Topics of member concern that
appear with high frequency at either AHCCCS or the health plans could become
focus areas for future reviews. For example, AHCCCS and its health plans
received many complaints regarding prescription drugs in 2001. With this
information, AHCCCS could focus on health plan and provider practices for
issuing prescriptions.
􀁺􇩍 Member and provider surveys—AHCCCS and the health plans conduct
member and provider surveys. While AHCCCS does not conduct surveys every
year, individual health plans frequently conduct member and provider surveys on
a variety of topic areas. AHCCCS could review these surveys for specific areas
of concern or current priorities in healthcare and delivery, and address these
areas in its OFR.
􀁺􇩐 Prior-year OFRs—Prior-year OFR finding areas and recommendations can
provide health plan-specific topics for future reviews. For example, 2001 OFRs
identified that six of nine acute care health plans did not ensure that required
interpreter services were available to non-English-speaking members. At the
same time, the AHCCCS member satisfaction survey conducted in 2000
identified that the ability to communicate with the health provider is a critical
component of member satisfaction with healthcare. AHCCCS has included a
review of interpreter availability in the 2002 OFR.
􀁺􇩃 Clinical performance indicator results—AHCCCS collects and tracks data for 17
different clinical performance indicators. While indicator results are not routinely
AHCCCS should
prioritize or reduce the
number of standards.
page14
State of Arizona
reported in the OFR, the clinical performance indicator data provides valuable
information on how well health plans are delivering services. The indicators
include access to care for adults, adolescents, and babies; immunization rates;
and cancer screening efforts for women. AHCCCS could use this information to
identify focus areas for specific health plans. (See Finding 4, pages 29 through
34 for more information on AHCCCS clinical performance indicators.)
AHCCCS should strengthen monitoring
AHCCCS should also strengthen its monitoring efforts to ensure health plan
deficiencies are corrected. Typically, when AHCCCS identifies deficiencies as part of
an OFR, it requires the health plan to develop a corrective action plan, but AHCCCS
does not always verify that the corrective action was implemented. This lack of
followup has allowed some problems to continue.
AHCCCS does not ensure corrective actions are taken—AHCCCS does
not verify whether health plans have implemented corrective actions. Although
AHCCCS obtains corrective action plans and other documentation, such as revised
policies and procedures, the existence of such plans may not ensure that corrective
action has occurred. According to AHCCCS management, in addition to requiring
corrective action plans, followup is ensured by the fact that subsequent OFRs will
review those areas in which the health plan was previously deficient. However,
AHCCCS did not reassess some important 1999 deficiencies in its 2000 OFR of acute
health plans. For example, based on the 1999 OFRs, many acute health plans
needed to implement corrective actions in categories such as quality management
and delivery systems. However, these categories were not reviewed in the 2000 OFR.
Finally, when auditors reviewed the 1999 OFR recommendations made for seven
health plans and compared them to 2001 OFR results, they found that some
problems continued despite the fact that health plans had submitted corrective action
plans to AHCCCS. For example,
􀁺􇨠 In its 1999 OFR of one acute health plan, AHCCCS identified deficiencies with
the health plan’s credentialing of dentists and the implementation of a system to
track whether members receive behavioral health services. The health plan
submitted corrective action plans that detailed how it would resolve these issues.
Nonetheless, AHCCCS did not review dentist credentialing files in the 2001 OFR,
but identified deficiencies with the health plan’s physician credentialing, as well
as its system for tracking members who receive behavioral health services.
AHCCCS ultimately issued a notice to cure to this health plan in November 2001,
for this and other quality management deficiencies.
1999 deficiencies still
existed in 2001 OFRs.
page15
One plan did not have
the required number of
dentists in several
communities.
Office of the Auditor General
􀁺􇩉 In the 1999 OFR of another health plan, AHCCCS identified that the plan did not
meet standards for the required number of dentists in several communities.
Additionally, the plan was not tracking whether members received behavioral
health services. The health plan submitted a corrective action plan specifying
actions it would take to address these concerns. However, in its 2001 OFR,
AHCCCS again found that the plan did not meet standards for the number of
dentists in several communities and for tracking behavioral health services.
AHCCCS should verify health plans’ corrective actions—When OFR
results show that the health plan needs to correct deficiencies that substantially
impact member health or service quality, AHCCCS should verify that corrective
actions have occurred. In its 1997 report, the U.S General Accounting Office found
that the success of healthcare quality oversight depends on whether the state’s
monitoring efforts are independent and systematic, and go beyond plan-reported,
paper-based indications of compliance. AHCCCS does not meet this standard.
AHCCCS should verify corrections have been made though either: 1) documentation
that provides evidence of implementation or, 2) through a follow-up visit to the
contractor. For example, some of the areas identified for corrective action in the 2001
OFRs that may warrant AHCCCS’ more timely and thorough followup include:
􀁺􇨠 One acute and one ALTCS health plan do not have adequate systems to monitor
and resolve member complaints;
􀁺􇨠 Six of nine acute health plans are not ensuring that required interpreter services are
available to members; and
􀁺􇨠 An ALTCS health plan is not conducting the required quality oversight of its group
homes, behavioral health facilities, and other home- and community-based services.
Recommendations
1. AHCCCS should modify its annual operational and financial reviews of health plans
to focus more on evaluating health plan performance outcomes.
2. If AHCCCS increases its focus on health plan performance outcomes in its OFRs,
which may require increased resources, AHCCCS should prioritize and consider
reducing the overall number of OFR standards that it evaluates during each
operational and financial review.
3. AHCCCS should enhance its follow-up efforts to ensure that health plans resolve the
problems identified in the operational and financial reviews, including obtaining
evidentiary documentation and conducting more frequent follow-up visits when
necessary to verify that corrective actions have occurred.
page16
State of Arizona
page17
Office of the Auditor General
FINDING 2
AHCCCS needs to ensure member complaints
are appropriately resolved
AHCCCS needs to ensure that all complaints it receives regarding quality of care are
appropriately resolved. Currently, AHCCCS refers the complaints it receives to its health
plans for investigation and resolution. When auditors reviewed a sample of such
complaints, they found that, for nearly half of the complaints requiring corrective action,
the files contained no indication that any corrective action had been taken. AHCCCS
should follow up on complaints it refers to health plans to ensure they are appropriately
resolved. AHCCCS also continues to refer complaints even in those cases where plans
appear to have deficient complaint-handling practices. Where it has identified deficient
complaint-handling practices, AHCCCS should work with the health plan to develop an
acceptable complaint-handling system and in the meantime, investigate and resolve
complaints it receives, rather than referring these matters to the health plans.
Complaints identify member concerns
Complaints serve as one mechanism to identify member concerns and make
improvements. According to the Center for Health Care Strategies, Inc., complaints
highlight how well customer satisfaction is being addressed and can provide early
warnings of potential systemic problems.1 Within the AHCCCS system, complaints
pertaining to the quality of care a member received, such as substandard nursing care or
difficulty getting medications and services, can be sent either to the health plan or directly
to AHCCCS. However, when AHCCCS receives quality-of-care complaints, it refers them
to the appropriate health plan for investigation and resolution. AHCCCS requires health
plans to investigate complaints it receives since it views the investigation and resolution
of member complaints as a health plan function. AHCCCS states that it is confident
relying on health plans to investigate and resolve these complaints because it ensures the
AHCCCS refers
complaints to health
plans for investigation
and resolution.
1 Verdier, James, and others. Using Data Strategically In Medicaid Managed Care. Center for Health Care Strategies, Inc.,
Chapter 4: Other Data Sources and Uses, 2002. [electronic version]
page18
State of Arizona
AHCCCS does not
consistently document
the appropriate
resolution of its
complaints.
1 Auditors reviewed ten complaints each from four health plans—two of which serve acute care members and two of which
serve ALTCS members. AHCCCS received these complaints during federal fiscal year 2001.
adequacy of the plans’ complaint-handling processes through the annual OFR. While the
health plans will independently investigate complaints, AHCCCS’ policy is to require
updates on the progress of investigations, provide direction on these investigations, and
require health plans to report on the complaint’s disposition.
AHCCCS receives several hundred quality-of-care complaints annually. Specifically,
for federal fiscal year 2001, AHCCCS reports that it directly received approximately
410 potential quality-of-care complaints from a variety of sources, including
members, providers, elected officials, and AHCCCS staff. AHCCCS referred most of
these complaints to the appropriate health plans for investigation and resolution.
However, AHCCCS does investigate and resolve a small number of complaints that
it receives involving members who are not served by a health plan.
AHCCCS has also developed and recently implemented a database to track all of
the complaints that it receives. In October 2001, AHCCCS began entering
information related to the nature and resolution of complaints it receives into this
database, whether investigated and resolved by the health plan or AHCCCS. With
this complaint information, AHCCCS will be able to identify trends and work to
resolve any systemic problems these trends identify.
Complaint resolution inconsistently occurs
AHCCCS’ approach does not ensure complaints are appropriately resolved and
changes are implemented to help prevent similar problems from reoccurring. Auditors’
review of complaint files found that neither AHCCCS nor the plans consistently ensure
that complaints AHCCCS refers are appropriately resolved. Therefore, AHCCCS should
follow up and document that necessary corrective actions have been implemented for all
of the complaints it receives.
AHCCCS cannot ensure all complaints are appropriately resolved—
While it appears appropriate for AHCCCS to refer the quality-of-care complaints it
receives to health plans for investigation and resolution, the steps AHCCCS is using do
not ensure that members’ concerns or systemic problems identified are appropriately
resolved. Auditors’ review of 40 complaints found no assurance that AHCCCS or the
health plans consistently document the appropriate resolution of member concerns and
implementation of corrective actions.1 Twelve of the 28 complaint files reviewed that
required corrective actions lacked documentation that the health plan addressed
member concerns and took necessary corrective actions. The following examples
illustrate complaints for which evidence of appropriate resolution could not be located in
AHCCCS’ or the health plans’ files.
􀁺􇨠 Inappropriate use of pain medications—In March 2001, AHCCCS received a
complaint from a doctor’s office regarding a member who was inappropriately
page19
Office of the Auditor General
seeking prescription pain medications. After the complaint investigation identified an
abnormal pattern of prescribing medications for this member, the health plan
informed AHCCCS of several actions it planned to take to address the member’s
needs and prevent this situation from reoccurring. These actions included: 1)
identifying the specific physicians who contributed to the member’s over-utilization
of prescriptions; 2) sharing the drug utilization profile with these physicians; 3)
contacting the member’s new doctor to alert him of the member’s prior history and
discuss a treatment plan; and 4) limiting the member to one pharmacy. However,
AHCCCS’ and the health plan’s files lacked evidence that any of these actions
were taken.
􀁺􇨠 Poor monitoring of patient’s blood sugar levels—In December 2000, AHCCCS
received a complaint regarding a facility that was not properly documenting and
monitoring care to address a member’s blood sugar levels. The health plan’s
investigation determined that the facility did not properly follow physician orders,
and the plan informed AHCCCS that the facility would: 1) develop a policy
regarding nursing interventions for episodes of hyperglycemia and
hypoglycemia; 2) train nursing staff on this policy; and 3) train nursing staff on
the facility’s policies for following physician orders and documenting care. While
documentation in AHCCCS’ file indicates that the health plan would follow up
with the facility on the new policy and trainings, auditors found no evidence in
AHCCCS or plan files that these actions occurred.
AHCCCS needs to ensure its complaints are resolved—AHCCCS
should ensure that corrective actions are implemented for all complaints it receives.
Specifically, AHCCCS should obtain documentation and confirm that appropriate
corrective actions have been taken. In some instances, contacting the complaint
originator may be the best way for AHCCCS to confirm that the concern has been
resolved. However, in other instances, AHCCCS needs to work with the health plan to
obtain evidence of corrective actions, such as copies of policies or training
attendance records. Whether contacting the complainant directly and/or requiring
evidence from the health plan, AHCCCS should follow up as long as necessary to
ensure that complaints are appropriately resolved. In many cases, AHCCCS should
be able to obtain this information through phone calls or letters.
AHCCCS should address deficient complaint handling
In addition to ensuring that complaints are resolved, AHCCCS should investigate and
resolve the complaints it receives when it has previously identified concerns with
health plan complaint-handling practices, and take action to remedy these practices.
Even though AHCCCS has identified problems with the complaint-handling
processes of 4 of 17 its health plans, it has continued to refer complaints to these
plans for investigation and resolution. To better ensure appropriate complaint
AHCCCS should
confirm that its
complaints have been
appropriately resolved.
page20
State of Arizona
investigation and resolution, if AHCCCS identifies health plan complaint-handling
problems, it should work with the health plan to address these problems, but also
investigate and resolve the complaints it receives until these problems are addressed.
Additionally, AHCCCS should enhance its monitoring of the complaints received
directly and investigated by health plans with deficient complaint-handling processes.
Complaints referred to plans with inadequate processes—AHCCCS
continues to refer complaints it receives to health plans for investigation and
resolution even in those instances in which it has identified deficiencies with these
plans’ complaint-handling processes. Examples of the four plans that were found to
have inadequate complaint-handling processes include the following:
􀁺􇩉 In 2001, AHCCCS found several problems with a health plan, including concerns
with how it documents and responds to complaints. Specifically, AHCCCS noted
that complaints were not thoroughly researched and properly resolved to prevent
their reoccurrence.
􀁺􇨠 In 2001, AHCCCS found that a different health plan failed to document resolution
for 11 (73.3 percent) of 15 complaints reviewed. For example, one complaint was
labeled as an unexpected death and closed without the health plan receiving
medical records or other documentation regarding the circumstances of the
death. In another two complaints, the files did not contain documentation of the
health plan following up on the concerns it had identified.
Despite these deficiencies, AHCCCS’ complaint databases show that it referred at
least 83 complaints to these 4 health plans for investigation and resolution after
AHCCCS identified deficiencies with their complaint-handling processes and before
it accepted the health plans’ corrective actions. Fifty-four of these complaints were
referred to one health plan.
AHCCCS should increase its oversight and handle its complaints—
When AHCCCS has identified significant problems with a health plan’s complaint-handling
process, it should take appropriate action against the health plan. This
action could include a formal notice to cure, which would require specific corrective
actions within a specified time period, or financial sanctions. Further, until problems
are resolved, AHCCCS should investigate and resolve the complaints it receives.
Even though health plans are required to investigate and resolve these complaints,
AHCCCS is ultimately responsible to ensure complaints are properly investigated and
member concerns addressed.
Further, for those health plans with complaint-handling deficiencies, AHCCCS should
also increase its monitoring of how the health plan handles the complaints it receives
directly. This monitoring could include AHCCCS requesting periodic reports from the
health plan about complaints the plan receives and reviewing how they were handled.
If through monitoring, AHCCCS continues to have concerns with the health plan’s
AHCCCS continues to
refer complaints to its
health plans even after
identifying deficient
processes.
page21
Office of the Auditor General
process, AHCCCS should work with and educate the plan on how to properly
investigate and resolve these complaints.
AHCCCS may need additional resources to handle its complaints and increase its
oversight of the way health plans handle complaints. Once AHCCCS has
implemented these recommendations and assessed their impact on its workload,
AHCCCS should determine if additional resources are needed and, if so, whether the
State or the health plans with deficient complaint-handling processes should pay for
them.
Recommendations
1. AHCCCS should ensure that complaints are appropriately resolved by obtaining
evidence that the member concern has been addressed and, when appropriate,
changes have been implemented to help prevent similar problems from
reoccurring. Where appropriate, AHCCCS should contact the complainant to
determine if the concern has been satisfactorily addressed.
2. In those instances where AHCCCS has identified significant problems with a
health plan’s complaint-handling process, AHCCCS should:
a. Take appropriate action against the health plan for its failure to properly
investigate and resolve complaints, possibly including a formal notice to
cure, which would require corrective actions within a specified time period,
or financial sanctions.
b. Investigate and resolve the complaints it receives rather than refer them to
the health plan until the plan has implemented a complaint-handling system
that meets AHCCCS’ requirements.
c. Increase its monitoring of how the health plan handles the complaints they
receive directly until the plan has demonstrated its ability to adequately
investigate and resolve complaints.
Where deficiencies are
identified, AHCCCS
should handle
complaints and increase
its oversight.
page22
State of Arizona
page23
Office of the Auditor General
FINDING 3
AHCCCS needs to do more to address concerns
with care for the developmentally disabled
AHCCCS needs to do more to ensure that quality-of-care concerns for its ALTCS
developmentally disabled members are addressed. Statute currently requires
AHCCCS to contract with the Department of Economic Security’s Division of
Developmental Disabilities (DDD) to provide services to the State’s developmentally
disabled population. However, AHCCCS has two long-standing concerns with DDD’s
provision of services to its members: complaint handling and tracking and the
provision of home modification services. Since 1996, DDD has not met AHCCCS’
standards for complaint tracking and resolution. Because AHCCCS is ultimately
responsible for ensuring that members’ complaints are appropriately resolved,
AHCCCS should expand its review of DDD’s complaint handling until DDD complies
with these standards. Additionally, AHCCCS has not ensured that DDD provides
home modification services, such as wheelchair ramps, in a timely manner. Although
AHCCCS took action in 2000 to address the delays in providing these services, it has
taken limited action to address the current delays in providing these services to its
members.
DDD serves the developmentally disabled
Statute currently requires DDD to oversee services to the State’s developmentally
disabled population. As a result, AHCCCS must contract with DDD to provide
services for its developmentally disabled Arizona Long Term Care System (ALTCS)
members. Nearly 40 percent of AHCCCS’ total ALTCS population (13,402 people) is
developmentally disabled and served by DDD.
Since statute requires that DDD serve this population, AHCCCS’ options for ensuring
that DDD is in compliance with contractual requirements are limited. As with other
plans, if DDD does not comply with its contract, AHCCCS can issue what is called a
DDD serves nearly 40
percent of AHCCCS’
ALTCS population.
page24
State of Arizona
DDD has not complied
with AHCCCS’
complaint-handling
requirements for several
years.
“notice to cure,” which describes what the health plan must do to be in compliance,
and provides a deadline for completing these tasks. However, AHCCCS’ tools for
enforcing this notice to cure are more limited for DDD than for other plans. If other
plans do not comply, AHCCCS can issue a fine, cap enrollment, or terminate the
contract. Since DDD is the only health plan allowed to serve the developmentally
disabled, AHCCCS can impose fines, but cannot cap enrollment or terminate the
contract.
Complaint-handling concerns continue
DDD’s complaint-handling process has not met AHCCCS’ contractual standards for
many years. Until DDD meets AHCCCS standards, AHCCCS should expand its
review of DDD’s complaint handling and continue to help the division reach
compliance with complaint-tracking and resolution standards.
Complaint-handling has not met standards since 1996—DDD’s
complaint-handling process has not met AHCCCS’ contractual standards for many
years. AHCCCS requires its health plans to track all member problems and
complaints and analyze the information to prevent similar problems from reoccurring.
However, DDD’s complaint-handling process has not met these standards since
1996, according to AHCCCS Operational and Financial Reviews. In December 2000,
AHCCCS issued a notice to cure, stating, among other things, that DDD had
“consistently failed to meet the complaint tracking and resolution standards
contained in their contract with AHCCCS….” and that “These standards have
repeatedly been out of compliance in past reviews.”
DDD has not carried out all of the actions AHCCCS required in its December 2000 notice
to cure. Specifically, AHCCCS’ notice required DDD to develop a comprehensive,
centralized, statewide written complaint system that aggregates all complaint data
statewide by June 15, 2001. DDD’s current complaint process is decentralized, with most
complaint information located in files spread across approximately 40 local offices.
Complaint information and investigation details are often also separate—partly in
members’ files, and partly in investigators’ files. DDD failed to meet the June 2001
deadline but, as discussed further below, it is currently working on a system to meet
AHCCCS requirements.
As a result of DDD’s inadequate progress in addressing the quality-of-care issues
identified in the December 2000 notice to cure, AHCCCS imposed a financial sanction of
$6,000 in February 2001. The notice to cure also remains in effect as of May 2002. In
addition, AHCCCS discovered another problem in its 2001 OFR. It found DDD in
noncompliance with the standard to appropriately respond to complaints and evaluate
the effectiveness of actions taken to improve care. AHCCCS found that four of the ten
page25
Office of the Auditor General
complaints it reviewed at the central office did not meet this standard and that some
lacked evidence of adequate research and documentation.
AHCCCS should expand its review of DDD complaint handling—
Because AHCCCS is ultimately responsible for ensuring that member complaints are
appropriately resolved, AHCCCS should continue to assist DDD in implementing an
acceptable system that captures all complaints and increase its complaint
monitoring. In response to the notice to cure, DDD began developing a computerized
complaint-tracking system that currently captures the most severe high-risk incidents,
such as abuse, accidental injury, and neglect. DDD plans on adding other incidents,
such as medications being given to the wrong person or medications not being given
at all, to this system. However, DDD’s system will still not contain all complaints or
quality-of-care concerns. As such, DDD has developed a work plan to ensure that the
remainder of its system development meets AHCCCS requirements. AHCCCS
reviewed this work plan in August 2002 and provided direction to DDD on additional
steps it should take to meet AHCCCS’ requirements. Because AHCCCS has
expertise in these systems, it should continue to work with DDD to help it develop a
system that meets standards.
Additionally, AHCCCS should expand its review of DDD complaint files during its
OFRs. Specifically, AHCCCS should review complaint files not only from the central
office, as it currently does, but from the local offices as well to ensure that all types of
complaints are being handled appropriately. The central office complaints are limited
to cases referred by AHCCCS to DDD for investigation. Because AHCCCS directs
DDD on issues that should be further investigated on these complaints, they are not
representative of how the majority of complaints DDD receives are handled.
Reviewing complaints handled by DDD’s local offices would provide AHCCCS with a
more accurate assessment of DDD’s complaint-handling practices. If AHCCCS
determines, as a result of these reviews, that DDD is not handling complaints
appropriately, it needs to determine what corrective action is necessary.
Home modifications remain untimely
In many instances, DDD has not provided timely home modification services that
enable AHCCCS’ developmentally disabled members to remain independent.
AHCCCS contractually requires DDD to provide timely home modifications, such as
roll-in showers and wheelchair ramps, to its members. However, DDD has not met the
approval time frames in nearly two-thirds of the cases reviewed. Providing timely
home modifications to AHCCCS members has previously been a concern and while
AHCCCS took action in 2000 to address this concern, it has taken limited action to
address the current problem. Therefore, AHCCCS should take the necessary actions
to ensure modifications are provided in a timely manner, and provide additional policy
direction to DDD regarding home modification requests.
AHCCCS should
expand its review of
DDD complaint
handling.
page26
State of Arizona
Home modifications delayed—DDD’s contract with AHCCCS calls for home
modification projects to be approved within 90 days of a request, with service
provision to occur within 150 days. However, based on a review of the January 2002
through May 2002 monthly tracking reports, of the 85 home modifications reported
as approved, 55 (65 percent) took longer than 90 days to approve. On average, it
currently takes DDD about 118 days to approve a home modification. As a result of
approval delays, 44 percent of the 64 modifications processed within this period took
more than the AHCCCS maximum of 150 days to complete.
Delays in providing medically necessary modifications may hinder AHCCCS’
developmentally disabled members’ ability to function independently in the
community and place them in potentially unsafe environments. Under 42 U.S.C.
§1396(2), state Medicaid programs must provide service that helps members retain
their independence. However, based on a review of 12 DDD modification cases that
took more than 90 days to approve, auditors identified examples of members whose
independence was hindered and whose safety and care, as well as their providers’
safety, were potentially affected. These included examples of a woman and a boy
who each waited over 8 months for the completion of modification to assist with
bathing and access to important areas of their homes.
Untimely provision of medically necessary home modifications has been a problem
for DDD in the past and untimely provision resulted in AHCCCS issuing a notice to
cure in April 2000. At that time, DDD had 112 modifications that had not been
completed. DDD eventually completed all 112 modifications and AHCCCS lifted the
notice in March 2001.
AHCCCS needs to ensure timely modifications—AHCCCS should take
action to ensure ALTCS members receive timely home modifications. After AHCCCS
lifted the notice to cure in March 2001, it required DDD to submit monthly modification
tracking reports so it could monitor the timely provision of modification services.
Although these reports have shown delays since at least January of 2002, AHCCCS
has not taken further action against DDD and stated it would not know if the delays
are justified until it conducts its OFR in September 2002. However, given the number
of delays and DDD’s history in providing untimely home modification services,
AHCCCS should review DDD’s home modification files as soon as possible to
determine if the delays are justified. If they are not, AHCCCS should use its various
options, such as another notice to cure or financial sanctions, to see that DDD
provides these services in a timely manner.
AHCCCS should reconfirm policy direction—Additionally, AHCCCS should
reconfirm its previous direction given to DDD regarding home modification requests.
Specifically, AHCCCS may need to further clarify for DDD at which point or date the 90-
day approval time frame begins. Based on auditors’ review of the January 2002 through
May 2002 monthly tracking reports, DDD revised the home modification request date or
“need identified” date for numerous home modification requests. Although AHCCCS sent
AHCCCS should
consider additional
actions to see that DDD
completes home
modifications in a timely
manner.
Forty-four percent of the
home modifications
took over 150 days to
complete.
page27
Office of the Auditor General
a letter to DDD in April 2002 directing DDD to use the date that the member makes the
request, DDD states that further clarification would be helpful.
Additionally, AHCCCS needs to specify under what circumstances DDD can close home
modification requests. Auditors’ review of the monthly tracking reports found that DDD
closed eight home modification requests when the member did not provide
documentation supporting the medical necessity of the request in a timely manner.
However, according to an AHCCCS official, it is inappropriate for DDD to close a home
modification request for this reason as DDD is responsible for obtaining the necessary
documentation. As a result, AHCCCS should provide direction to DDD on this issue. In
the meantime, DDD has instituted additional mechanisms to track whether the necessary
documentation has been provided and/or to obtain the necessary documentation in a
timely manner.
Recommendations
1. AHCCCS should continue to help DDD develop a centralized complaint-handling
system that meets standards.
2. AHCCCS should increase its monitoring of DDD complaints by reviewing files
not only from the central office, as it currently does, but also from the local offices
to ensure that all types of complaints are being handled appropriately.
3. AHCCCS should review DDD’s home modification files as soon as possible to
determine if delays in providing home modification services are justified.
4. If AHCCCS determines that DDD’s delays in providing home modification services
are not justified, AHCCCS should use its various options, such as another notice to
cure or financial sanctions, to see that DDD provides these services in a timely
manner.
5. AHCCCS should provide direction to DDD on which date the 90-day home
modification approval time frame begins and under what circumstances home
modification requests may be closed.
page28
State of Arizona
page29
Office of the Auditor General
FINDING 4
Clinical performance indicators provide useful
information
In addition to conducting annual reviews and monitoring complaints, AHCCCS uses
clinical performance indicators to track how well the system is delivering services that
help to keep members healthy. These indicators cover such services as
immunizations, cancer screenings, and well-child checkups. AHCCCS also
periodically reviews the indicators to ensure they present meaningful information on
the health care provided to AHCCCS members. While such indicators are useful,
some changes could enhance their impact. First, because the indicators provide
valuable information about how well health plans are delivering services, AHCCCS
should use them as part of its annual OFR assessments. Second, AHCCCS should
take additional steps to ensure that corrective action is taken when indicator results
show problems with individual health plans.
Indicators help monitor progress
AHCCCS currently collects data on 17 clinical performance indicators that span a variety
of services. These indicators are helpful both in assessing how individual plans are
performing and in helping AHCCCS determine how Arizona’s program is progressing in
meeting national goals.
Current indicators cover a wide variety of services—AHCCCS requires
health plans to submit information on 17 clinical performance indicators, such as the
percentage of low-birth weight babies and the percentage of elderly members receiving
flu shots. Most of these indicators are based on the Health Plan Data and Information Set
(HEDIS). HEDIS is a standardized set of performance measures used by employers and
consumers to compare the quality of care rendered by managed care organizations.
HEDIS has become the standard for assessing managed care organizations’
performance, with almost 90 percent of such organizations collecting and reporting
HEDIS results.
page30
State of Arizona
AHCCCS health plans are contractually required to meet minimum
performance standards for each of the indicators as well as continually
improve their performance from year to year. These requirements are
conveyed in three performance levels incorporated into contracts with
plans providing acute care services (refer to the text box for a description
of these performance levels).1 For example, the minimum performance
standard for cervical cancer screening calls for providing at least one Pap
smear within a 3-year period to at least 57 percent of enrolled women aged
16-64. Beyond this minimum standard, the plan must keep making
progress to a goal of 60 percent and an eventual benchmark of 85 percent.
Table 4 (see page 31) shows the 17 clinical performance indicators and the
levels of performance stipulated for each one. The current set of
performance standards and performance levels pertains only to health
plans that provide acute care. However, AHCCCS has incorporated such
standards and measures into its next contracts with long-term plans, which
will start in federal fiscal year 2003.
Indicators track individual plans’ performance—One
purpose of the indicators is to track individual health plan performance.
When an acute care health plan has not shown demonstrable and
sustained improvement toward meeting contractual performance
standards for the clinical performance indicators listed on Table 4 (see
page 31), AHCCCS requires the plan to submit a corrective action plan.
These plans typically involve the health plan analyzing its operations for
possible causes or links to the poor performance and devising
strategies to improve it. For example, as a strategy to reduce the
percentage of low-birth weight deliveries, one health plan determined it
would provide case management services to high-risk pregnancies.
Another health plan strategy to affect its indicator results is to advertise
$50 gift certificates to pregnant women who show up for at least five
prenatal visits.
Indicators assess progress toward national goals—Even
though AHCCCS has established three levels of performance for its indicators, it
ultimately strives to reach national health goals. The benchmarks that health plans
should target are derived from the U.S Department of Health and Human Services’
Office of Public Health and Science, “Healthy People 2010” initiative. Healthy People
began in 1979 as a comprehensive, nationwide health promotion and disease
prevention agenda. It is designed to serve as a road map for improving the health of
all people in the United States and has two main goals: to increase the quality and
years of healthy life and to eliminate health disparities. Arizona has a similar statewide
health agenda called “Healthy Arizona 2010,” which is based on the national model.
As illustrated in Table 5 (see page 32), AHCCCS’ success at moving its population
toward these benchmarks has been mixed. Of the 14 indicators for which historical
Clinical Performance Indicator
Standards
Minimum Performance Standard
This standard represents the minimally
expected level of performance. In
deriving this standard, AHCCCS
considers the existing statewide average
and the high and low health plan results
from previous years. If a health plan
does not achieve this standard for 2
consecutive years, it may be subject to
sanctions. This standard can change as
the statewide average changes.
Goal
The goal represents the next step for
those health plans that have met the
minimum standard but have not yet
achieved the benchmark. The goal can
also change as the minimum
performance standard changes.
Benchmark
The benchmark represents the ultimate
standard to be achieved and is
generally based on the Healthy People
2000 or Healthy People 2010 initiative,
whichever is the most current for the
indicator.
1 Prior to October 2001, AHCCCS’ Acute Care contract had only one performance level required of health plans. This level
was typically based on the statewide average.
page31
Office of the Auditor General
Table 4 Performance Indicators
Federal Year Ending September 30, 2002
Percentage of Population
Performance Indicator
Description
Statewide
Average
AHCCCS
Goal
National
Benchmark
Acute Care
Low-birth weight deliveries1 Babies born under 2,500 grams1 8.2%1 7.5%1 5% 1
Well-child visits in the first 15
months
Children who received at least six well-child
visits in the first 15 months of life
58.3 64 90
Immunizations in 2-year-olds
Children who received series of five
different vaccines by 24 months of
age
65.0 73 90
Well-child visits in 3- to 6-year-olds
Children who received at least one well-child
visit within reporting year
44.5 64 80
Children’s access to primary
care providers (PCP)
Children ages 1-20 years who received
at least one PCP visit during reporting
year
72.9 80 95
Adolescent well-care visits Adolescents ages 11-20 years who
received at least one well-care visit
during 2-year reporting period
49.0 49 50
Annual dental visits Members ages 3-20 years who had at
least one dental visit within reporting
year
43.5 55 90
Prenatal care in the first
trimester
Women who had a prenatal care visit
during the first trimester of pregnancy
55.2 65 90
Breast cancer screening Women ages 52-64 who received a
mammogram during 2-year reporting
period
56.1 60 60
Cervical cancer screening Women ages 16-64 who received a Pap
smear during 3-year reporting period
54.7 60 85
Adult access to ambulatory and
preventative care services
Members ages 21-64 who received at
least one preventative visit during the
reporting year
77.9 80 95
Long-Term Care2
Initiation of home- and
community-based (HCB)
services
Newly enrolled members in a HCB
setting who received services within
30 days of enrollment
87.0 100 N/A
Influenza immunizations in
nursing facilities (NF)
Members living in NF who received an
influenza immunization
82.7 90 90
Influenza immunizations in
home- and community-based
(HCB) settings
Members living in HCB settings who
received an influenza immunization
50.5 90 90
Pneumonia vaccinations in
nursing facilities (NF)
Members living in NF who received a
pneumonia vaccination
69.6 90 90
Pneumonia vaccinations in
home- and community-based
(HCB) settings
Members living in HCB settings who
received a pneumonia vaccination
43.9 90 90
Diabetes indicator3 Diabetic members who receive three
types of assessment services
N/A N/A N/A
1 For the low-birth weight deliveries indicator, a lower percentage indicates better performance; for all other indicators, a higher percentage
indicates better performance.
2 Long-term care indicators do not apply to the developmentally disabled population.
3 Data is not cited because comparison information is not yet available.
Source: Auditor General staff summary of data from the Arizona Health Care Cost Containment System’s 2000 through 2002 performance
indicator reports and analysis of AHCCCS’ acute care contracts for federal year 2002.
Table 4 Clinical Performance Indicators Required by
AHCCCS’ Federal Fiscal Year 2002 Contracts
page32
State of Arizona
AHCCCS’ success in
reaching national health
goals has been mixed.
data is available, 5 showed improvement. For example, pneumonia vaccinations in
nursing facilities, immunizations of 2-year-olds, and annual dental visits all improved
over a 3-year period. In contrast, breast and cervical cancer screenings, low-birth
weight deliveries, and well-child visits for 3- to 6-year-olds fluctuated within this time
frame. Finally, performance on children’s access to primary care and influenza
immunizations in nursing facilities declined.
AHCCCS periodically reviews indicators
Because the indicators help monitor how well the system is delivering services, AHCCCS
periodically reviews them to ensure they are providing meaningful information to its health
plans. For example, AHCCCS recently replaced two of its ALTCS indicators, prevalence
Table 5 Statewide Clinical Performance Indicator Results1
Federal Years Ended September 30, 1998 through 2000
Improved Results Mixed Results Decline in results
Well-child visits up to 15 months
Immunizations in 2-year-olds
Prenatal care in the first
trimester
Children’s access to primary
care providers2
Adolescent well-care visits
Low-birth weight deliveries
Influenza immunizations in nursing
facilities3
Annual dental visits
Well-child visits in 3- to 6-year-olds
Cervical cancer screening
Pneumococcal vaccination in
nursing facilities
Breast cancer screening
Adult access to ambulatory
and preventative care
Influenza immunizations in
home- and community-based
settings
1 The Arizona Health Care Cost Containment System (AHCCCS) has 17 clinical performance indicators; however, results are presented for only
those indicators for which 3 consecutive years of data were available.
2 Although the results of this indicator declined, the results remained above AHCCCS’ goal.
3 In 2000-2001, there was a vaccine shortage which could have contributed to the decline.
Source: Auditor General staff analysis of AHCCCS statewide clinical performance indicator results for federal fiscal years 1998 through 2000.
Table 5 Statewide Clinical Performance Indicator Results1
Federal Years Ended September 30, 1998 through 2000
page33
Office of the Auditor General
AHCCCS should
enhance its followup to
ensure corrective
actions are
implemented.
of bedsores and fractures related to falls, because it felt its efforts would be better served
in other health areas. Specifically, the prevalence of bedsores on the elderly indicator
showed substantial improvement over time. The fractures related to falls indicator showed
no trend and therefore provided limited information to health plans. In addition, although
HEDIS has dropped the low-birth weight indicators, AHCCCS has indicated it will
continue to track this information because continuing to track low birth weight helps
identify opportunities to improve birth outcomes and reduce costs.
In addition, AHCCCS may be revising its indicators in the future to comply with a proposal
for national mandated Medicaid performance indicators. As a result of increased federal
pressure to report on the performance of Medicaid programs and the need for
comparable state-to-state information, the Centers for Medicare and Medicaid Services
(CMS) has convened the Performance Measurement Partnership Project. This project is
a collaborative effort between the National Academy for State Health Policy and federal
and state officials to explore whether a consensus can be reached on developing a
limited core set of performance measures for all Medicaid programs. AHCCCS is one of
15 states asked to participate in selecting, collecting, and reporting a core set of
performance measures. Final recommendations to CMS on the development of this core
measurement set are scheduled to be submitted in September 2002.
Minor changes could enhance impact
While the indicators offer valuable information about the quality of care for AHCCCS
members, minor changes could enhance their impact. First, because the indicators
provide important information at the health plan level, AHCCCS should use the indicator
results when assessing health plan performance during its OFR process. In addition,
AHCCCS should take additional steps to ensure that health plans implement their
corrective action plans when indicator results do not meet AHCCCS standards.
AHCCCS should use indicator results during OFR—Because the clinical
performance indicators provide valuable information about the performance of
individual health plans, AHCCCS should incorporate these results into its OFR report
and use the information when assessing performance. As indicated in Finding 1 (see
pages 9 through 15), one of the OFR’s primary goals is to ensure the effective delivery
of health services. While the indicators provide important information in this area, they
are not routinely used during the OFR when judging health plan performance. If
AHCCCS implements the recommendations in Finding 1 (see page 15) and begins
moving the OFR from a process-oriented, strict compliance review of health plans to
a more performance-oriented review, indicator results can provide readily available
information about performance.
page34
State of Arizona
AHCCCS should expand followup—To ensure that health plans address
substandard performance related to these standards, AHCCCS may also need to
take additional steps beyond its existing practice of requiring corrective action plans.
Similar to the OFR corrective action plans discussed in Finding 1 (see pages 9
through 15), AHCCCS should request additional documentation that demonstrates
that the health plan has implemented the actions described in its plan. In those cases
where the health plans’ performance has declined for consecutive years in spite of
their corrective action plans, or it is not possible to verify corrective action through
documentation, AHCCCS may need to conduct a site visit to ensure the plan was
ultimately implemented.
Recommendations
1. Because the clinical performance indicators provide valuable information about
the performance of individual health plans, and where applicable to OFR
standards, AHCCCS should incorporate the indicator results into its OFR report
and use the information when assessing performance.
2. As part of the process for improving performance when health plans do not meet
the contract specifications, AHCCCS should either request documentation or
conduct a site visit to ensure that the health plan has implemented the actions
described in its plan.
Office of the Auditor General
Agency Response
State of Arizona
ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
Committed to Excellence in Health Care
Jane Dee Hull
Governor
Phyllis Biedess
Director
801 East Jefferson • Phoenix, Arizona 85034-2246 • P.O. Box 25520 • Phoenix, Arizona 85002-5520 • (602) 417-4000
Internet: www.ahcccs.state.az.us
September 11, 2002
Debra Davenport, CPA
Auditor General
Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 85034
Re: Performance Audit, AHCCCS Processes for Monitoring the Quality of Care
Dear Ms. Davenport:
Thank you for the opportunity to review and comment on the Quality of Care performance
audit. Quality of Care is obviously one of the core functions at AHCCCS. It is critical to our
Medicaid system and the services that are provided to over 800,000 Arizonans. For that
reason, AHCCCS has spent years developing and refining four different tools that are used to
evaluate the Quality of Care provided within the AHCCCS system. AHCCCS is proud of the
system that has been developed and we appreciate the Auditor General acknowledging this
in the report which states;
“Additionally, a U.S. General Accounting Office report notes that AHCCCS requires its
health plans to provide data documenting the patient care provided to conduct various
patient outcome studies and also indicates that (Arizona’s AHCCCS program can serve as a
model for other Medicaid programs).”
That being said, there are no doubt some areas of improvement where the implementation of
Auditor General recommendations will continue to improve the program. However,
AHCCCS continues to believe that the Auditor General report over-emphasizes the need for
the agency to rely on the Operational and Financial Review (OFR) to serve as the ultimate
measure of Quality of Care. As stated above, the OFR is just one of four tools that AHCCCS
relies on to monitor Quality of Care in Arizona. The other tools that do provide critical
information include:
· Quality Management Plans
· Clinical Performance Indicators
· Quality of Care Complaints
It is also important to acknowledge at the outset of our comments that almost half of the
recommendations contained within the Auditor General report pertain to the
Developmentally Disabled program within the Department of Economic Security. This
program faces numerous challenges and fundamental change can occur only when both state
agencies work together.
Debra Davenport, CPA
September 11, 2002
Page Two
DES is a critical component and partner in addressing DDD recommendations identified by the
Auditor General.
Page 15 Recommendations:
Recommendation #1
AHCCCS should modify its annual operational and financial reviews of health plans to focus
more on evaluating health plan performance.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
However, AHCCCS will continue to rely on all four tools to evaluate the Quality of Care for our
members.
Recommendation #2
If AHCCCS increases its focus on health plan performance outcomes in its OFRs, which may
require increased resources, AHCCCS should prioritize and consider reducing the overall
number of OFR standards that it evaluates during each operational and financial review.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
Recommendation #3
AHCCCS should enhance its follow-up efforts to ensure that health plans resolve the problems
identified in the operational and financial reviews, including obtaining evidentiary
documentation and conducting more frequent follow-up visits when necessary to verify that
corrective actions have occurred.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented. It will however, have resource implications.
Page 21 Recommendations:
Recommendation #1
AHCCCS should ensure that complaints are appropriately resolved by obtaining evidence that
the member concern has been addressed and, when appropriate, changes have been
Debra Davenport, CPA
September 11, 2002
Page Three
implemented to help prevent similar problems from reoccurring. Where appropriate, AHCCCS
should contact the complainant to determine if the concern has been satisfactorily addressed.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
While AHCCCS believes much of this recommendation is being done, we will develop a policy
that will outline a process that includes, where appropriate, contacting the complainant to
determine if there has been satisfactory resolution. We will also, where appropriate, ensure that
changes have been implemented to help prevent reoccurrence of similar complaints. The
implementation of this policy may have a resource impact and require additional staff.
Recommendation #2
In those instances where AHCCCS has identified significant problems with a health plan’s
complaint-handling process, AHCCCS should:
a. Take appropriate action against the health plan for its failure to properly
investigate and resolve complaints, possibly including a formal notice to cure,
which would require corrective actions within a specified time period, or
financial sanctions.
b. Investigate and resolve the complaints it receives rather than refer them to
the health plan until the plan has implemented a complaint-handling system that
meets AHCCCS requirements.
c. Increase its monitoring of how the health plan handles the complaints they
receive directly until the plan has demonstrated its ability to adequately
investigate and resolve complaints.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
In regard to a. above, AHCCCS has utilized notice to cure and monetary sanctions against health
plans for these infractions. We will continue to utilize these actions to ensure timely and
complete resolution of complaint handling problems by our health plans.
Debra Davenport, CPA
September 11, 2002
Page Four
Page 27 Recommendations:
Recommendation #1
AHCCCS should continue to help DDD develop a centralized complaint-handling system that
meets standards.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
As AHCCCS has done for the last several years, we will continue to try and work closely with
DES to accomplish all recommendations regarding DDD.
Recommendation #2
AHCCCS should increase its monitoring of DDD complaints by reviewing files not only from
the central office, as it currently does, but also from the local offices to ensure that all types of
complaints are being handled appropriately.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
The implementation of the recommendation may require additional resources.
Recommendation #3
AHCCCS should review DDD’s home modification files as soon as possible to determine if
delays in providing home modification services are justified.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
As we did in 2000, AHCCCS has begun a forms review of DDD home modification files, and
have scheduled a comprehensive review of DDD’s home modification approval process. This
will take place in September 2002. We will increase our efforts at holding DDD to this standard
and apply sanctions as appropriate.
Debra Davenport, CPA
September 11, 2002
Page Five
Recommendation #4
If AHCCCS determines that DDD’s delays in providing home modification services are not
justified, AHCCCS should use its various options, such as another notice to cure or financial
sanctions, to see that DDD provides these services in a timely manner.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
Recommendation #5
AHCCCS should provide direction to DDD on which date the 90-day home modification
approval time frame begins and under what circumstances home modification requests may be
closed.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented. It should be noted that AHCCCS has both met with DES on several
occasions and provided written instructions with regard to the time frame issue.
Page 34 Recommendations:
Recommendation #1
Because the clinical performance indicators provide valuable information about the performance
of individual health plans, and where applicable to OFR standards, AHCCCS should incorporate
the indicator results into its OFR report and use the information when assessing performance.
Response: The finding of the Auditor General is agreed to and a different method of dealing
with the finding will be implemented.
The OFR is a snapshot in time that assesses the contracted health plan’s compliance with
financial, operational and contractual requirements. The Annual Quality Management Plan and
Evaluation, along with the required medical audits and studies, combined with the mandated
clinical performance indicators give an ongoing, trended, record of the plan’s outcomes as
related to the delivery of health care and health maintenance services. We feel these give a much
broader assessment of the health plan’s quality of health care delivery to our members. To
merge these all into the OFR process would create blurring of these important distinctions and
add significant operational burden to both AHCCCS and our contracted plans.
Debra Davenport, CPA
September 11, 2002
Page Six
We propose to continue our present process, but in order to implement this recommendation, we
will add to the OFR a review of all instances of substandard scores on clinical performance
indicators and any corrective action plans (as per recommendation #1 and #2 on page 15). These
will then be factored into the scoring of the OFR.
Recommendation #2
As part of the process for improving performance when health plans do not meet the contract
specifications, AHCCCS should either request documentation or conduct a site visit to ensure
that the health plan has implemented the actions described in its plan.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
We appreciate the efforts of the audit team.
Sincerely,
Phyllis Biedess
Director
ARIZONA DEPARTMENT OF ECONOMIC SECURITY
1717 West Jefferson • P.O. Box 6123 • Phoenix, Arizona 85005
Jane Dee Hull John L. Clayton
Governor Director
Debbie Davenport
Arizona Auditor General
2910 N. 44th St, Suite 410
Phoenix, AZ 85018
Dear Ms. Davenport:
Thank you for the opportunity to provide comments on the AHCCCS audit and DES
efforts to address quality of care concerns and home modifications for ALTCS members
who have developmental disabilities.
The following are our responses to the findings contained in the report. We have noted
each recommendation in italics, and listed our response following each finding.
I believe it is important to mention that this audit should be placed in the context of the
economics of the past 18 months. This has been a period of increasing financial and
resource constraints due to the contractions of the state budget. Indeed during this past
fiscal year, AHCCCS reduced its capitation rate by 5% to the Division. Additional
resources were planned for investment in both the quality management area (care
concerns) and the home modifications unit. These additional resources were not allocated
in order to constrain budgets, at a time when membership growth averaged 80 new
members per month and home modification requests increased 60%. Because we concur
with the importance of appropriately managing care concerns and ensuring the timeliness
of home modifications, we are assessing current resources for the possible redeployment
of staff from other functions to these activities.
We firmly believe that at no time were the ‘safety and care’ of any member or their
caregivers jeopardized due to the failure to meet either the 90 day or 150 day timeline.
Where life safety was the case, the Division acted with priority dispatch to complete the
home modification.
Sincerely,
John L. Clayton
AHCCCS’ and DES’ Efforts to Address Quality of Care Concerns
for Developmental Disabilities Members
Finding III recommendations:
1. AHCCCS should continue to help DDD develop a centralized complaint handling
system that meets standards.
The Department welcomes any additional assistance AHCCCS can provide in the
completion of this effort. Our current work plan commits to a retooling of our Phase
1 incident reporting system and the implementation of a web-based Phase 2-complaint
management system by January 2003. AHCCCS has been vigorously engaged in
monitoring our response to the 2001 Notice to Cure. We have, for the past year, met
in regularized meetings to discuss progress made and problems encountered. We have
kept them apprised of our efforts and they have been equally forthcoming with their
expectations.
2. AHCCCS should increase its monitoring of DDD complaints by reviewing files not
only from the central office, as it currently does, but also from the local offices to
ensure that all types of complaints are being handled appropriately.
The Department welcomes any additional assessment and recommendations
AHCCCS may have as a result of broader file reviews.
3. AHCCCS should review DDD’s home modification files as soon as possible to
determine if delays in providing home modification services are justified.
The Department welcomes any additional assessment and recommendations
AHCCCS may make after additional review of files. While we believe many of these
delays have their origins in satisfying member expectations and requirements within a
program with numerous policy and procedural constraints, the Division recognizes
that there have been some requests that have taken too long for approval. These have
resulted from limited resources and exploding growth in the use of and cost of the
program. An additional staff support was added recently to improve the processing of
requests. This cleared the calendar for the primary employee to complete home
studies. We are assessing the need for additional resource investments in this area.
4. If AHCCCS determines that DDD’s delays in providing home modification services
are not justified, AHCCCS should use its various options, such as another notice to
cure or financial sanctions, to see that DDD provides these services in a timely
manner.
The Department disagrees with the use of financial sanctions in an environment where
resource constraints and exploding growth are the likely source of delays. As you
correctly report, the last notice to cure was lifted 18 months ago when AHCCCS
determined that home modifications were being handled in a timely fashion. Since
then, the rate of requests has increased 60%, but the Division’s available resources for
this area have been frozen or reduced and the AHCCCS capitation rate has been
reduced. The resources required to meet a financial sanction would be far better
invested in an additional investment in staffing resources.
5. AHCCCS should provide direction to DDD on which date the 90 day home
modification approval time frame begins and under what circumstances home
modification requests may be closed.
These clarifying discussions have been initiated.
01-17 Arizona Board of Dispensing
Opticians
01-18 Arizona Department of
Corrections—Administrative
Services and Information
Technology
01-19 Arizona Department of
Education—Early Childhood
Block Grant
01-20 Department of Public Safety—
Highway Patrol
01-21 Board of Nursing
01-22 Department of Public Safety—
Criminal Investigations Division
01-23 Department of Building and
Fire Safety
01-24 Arizona Veterans’ Service
Advisory Commission
01-25 Department of Corrections—
Arizona Correctional Industries
01-26 Department of Corrections—
Sunset Factors
01-27 Board of Regents
01-28 Department of Public Safety—
Criminal Information Services
Bureau, Access Integrity Unit,
and Fingerprint Identification
Bureau
01-29 Department of Public Safety—
Sunset Factors
01-30 Family Builders Program
01-31 Perinatal Substance Abuse
Pilot Program
01-32 Homeless Youth Intervention
Program
01-33 Department of Health
Services—Behavioral Health
Services Reporting
Requirements
02-01 Arizona Works
02-02 Arizona State Lottery
Commission
02-03 Department of Economic
Security—Kinship Foster Care
and Kinship Care Pilot
Program
02-04 State Parks Board—
Heritage Fund
02-05 Arizona Health Care Cost
Containment System—
Member Services Division
02-06 Arizona Health Care Cost
Containment System—Rate
Setting Processes
02-07 Arizona Health Care Cost
Containment System—Medical
Services Contracting
Performance Audit Division reports issued within the last 12 months
Future Performance Audit Division reports
Arizona Health Care Cost Containment System—Sunset Factors
Department of Economic Security—Child Protective Services